Trading activity in the local currency market remained subdued last week in the absence of any development.

With the country’s foreign exchange reserves at record levels and sufficient forex inflows, the supply and demand for dollar remained at a comfortable level and relieved pressure on the rupee.

The rupee recorded all-round gains versus the dollar and euro during the week. Besides persistent selling of the dollar by exporters and banks, major currencies overseas also provided relief to the rupee.

The rupee maintained its firm undertone against the dollar and euro during the week

As a result, the rupee maintained its firm undertone against the dollar and euro during the week.

However, the differential between the rupee/dollar’s interbank and open market rates last week varied between the high of 63paisa and low of 45paisa. It was 63paisa at the close of last week.

Last week on the interbank market, the rupee/dollar parity showed a steady trend.

The dollar to rupee exchange rate succumbed to almost a week low, closing the week at Rs104.60 and Rs104.62. The rupee appreciated due to dollar selling by some banks and exporters in the market.

On week on week basis, the rupee, managed to gain 23paisa against the dollar on the interbank market last week.

According to some currency dealers SBP measures to tighten some rules regarding foreign exchange management to restrict outflows and stabilise the domestic currency have started yielding positive results.

As a result, the dollar further descended to the week’s lowest level at Rs105.05 and Rs105.25 amid subdued importers demand at the close of the week.

Besides, the dollar in the overseas trade remained mostly unchanged against its major as investors continued to debate the outlook for interest rates which also helped the rupee to stabilise in the local currency market.

During the week in review, the rupee in the open market gained 15paisa against the dollar on week on week basis.

Against euro, snapping four sessions stability, the rupee ended the week on a negative note as the euro managed to claw back some of its losses, recovering 30paisa against the rupee in the last trading session.

The rupee to euro exchange rate thus drifted lower at Rs116.60 and Rs118.10 at the close of the week as the euro erased losses against the dollar after hitting a nine-day low in overseas trade on reduced concerns surrounding Deutsche Bank’s health.

During the week in review, the euro managed to gain 30paisa in one session after losing 70paisa in two sessions and trading unchanged against the rupee in two sessions.

On week over week basis, the euro still suffered 40paisa loss against the rupee last week.

Published in Dawn, Business & Finance weekly, October 3rd, 2016