THE demand and supply of dollar in the local currency market remained moderate last week ahead of the federal budget announcement.

The rupee showed a firm trend against the dollar on the interbank market amid dull trading.

Build up of liquid foreign exchange reserves to historic levels and sufficient home remittances from overseas workers resisted the dollar surge against the rupee.

. Extending previous weekend weakness it inched down by one-paisa on the buying counter and another two paisas on the selling counter and drifted lower versus the dollar at Rs104.85 and Rs104.87 in the first trading session from the last closing at Rs104.84 and Rs104.85.

In the second trading session, however, the rupee managed to hold its overnight level against the dollar as it traded flat for the second straight day at Rs104.85 and Rs104.87.

On fresh selling of dollar by the banks and exporters, the rupee posted five paisas gain against the dollar on the buying counter and also picked up six paisas on the selling counter, closing the third session at Rs104.80 and Rs104.81.

The build up of liquid foreign exchange reserves to historic levels and sufficient home remittances resisted the dollar surge against the rupee

The dollar in the fourth trading session plunged to almost an eight-week lows against the rupee on fresh selling of the greenback by exporters amid low demand for import and corporate payments.

The rupee rebounded sharply in the last trading session and closed the week on a positive note ahead of federal budget announcement for the fiscal year 2016-17. The dollar plunged to Rs104.63 and Rs104.65, a level closed to February 26, after the rupee posted eight paisas gain on the buying counter and seven paisas gain on the selling counter before hitting its highest level in four months.

On week on week basis, the dollar on the interbank market lost 21 paisas on the buying counter and 20 paisas on the selling counter against the rupee last week.

In the open market, the rupee showed a firm trend, moving both ways in narrow band against the dollar. Continuing the prior week’s four-session winning streak, the rupee commenced last week in plus and posted 15 paisas gain against the dollar in the first trading session at Rs105.10 and Rs105.30 compared to prior weekend levels of Rs105.25 and Rs105.45.

The dollar managed to gain only five paisas against the rupee in the open market on week on week basis.

Against euro, the rupee commenced the week on negative note, shedding 40 paisas in the first trading session with euro changing hands at Rs117.00 and Rs118.00 against the previous weekend’s Rs116.60 and Rs117.60.

At the close of the week, the euro drifted lower at Rs117.30 and Rs118.30 against the rupee. During the week, euro still gained 70 paisas against the rupee on week on week basis.

Published in Dawn, Business & Finance weekly, June 6th, 2016