Mixed sentiments were witnessed in the local currency market last week.

The dollar became little more expensive against the rupee in both the interbank market as well as the open market last week as few oil payments had escalated the demand for the foreign currency towards the end of the week. At the same time, the differential in dollar rates of the two markets narrowed to five-paisa in the last week’s opening session and then widened again to 31paisa in the third session.

On the interbank market, the rupee was seen under downward pressure against the dollar in early trade last week after showing positive trends over the past two weeks. Despite comfortable dollar supplies, the rupee commenced the week on a negative note against the dollar due to mounting demand from importers for payments.

The rupee closed the week in negative, trading against the dollar at Rs104.74 and Rs104.76, after 16paisa loss in the last two sessions. During the week in review, the dollar in the interbank market posted 52paisa gain against the rupee on week on week basis.

During the week in review, the dollar in the interbank market posted 52paisa gain against the rupee on week on week basis

In the open market, the rupee fluctuated amid low demand last week after staging sharp recoveries against the dollar in the previous week. It commenced the week on a negative note as it posted ten-paisa loss in the first trading session, enabling the dollar to rise to Rs104.60 and Rs104.80 from the previous week close of Rs104.50 and Rs104.70.

At the close of the week, the rupee receded to Rs104.80 and Rs105.00 against the dollar, a level earlier seen on June 14. On week over week basis, the rupee lost 30paisa against the dollar on the interbank market last week.

Against euro, the rupee turned negative last week after snapping the preceding week’s five-session winning streak. Moving both ways between the high of Rs117.20/Rs118.20 and the low of Rs117.75/Rs118.75 amid fluctuations during the week, the rupee lost 35paisa against the euro in the first trading session.

The rupee failed to extend overnight firmness and resumed lower at Rs117.50 and Rs118.50 after suffering 20paisa loss in the third trading session as the euro nursed losses against the dollar in international trade after the benchmark German government bond yield turned negative for the first time due to worries that Britain might vote next week to leave the European Union, while investors stayed cautious ahead of a Federal Reserve’s policy decision later in the global day.

The rupee closed the week at Rs117.75 and Rs118.75, the week’s lowest level, after shedding 55paisa against the euro. During the week, the rupee suffered a loss of Rs1.10 in three sessions and at the same time managed to recover 60paisa in two sessions. On week on week basis, the euro still posted 50paisa gain against the rupee.

Published in Dawn, Business & Finance weekly, June 20th, 2016