The local currency market witnessed highly volatile trade last week.

Sluggish domestic stock market activities and persistent capital outflows, weighed down by lingering political uncertainty over the Nov 2 protest called by Imran Khan’s opposition party in Islamabad, kept investors on the sidelines.

Besides, buoyant dollar sentiment overseas amid impending Fed rate hike fears and abrupt rise in month-end dollar demand in domestic market, predominantly impacted market sentiment and largely pressurised the rupee in the local currency market.

On the interbank market, the dollar swung between a low of Rs104.76/78 and a high of Rs104.84/85 against the rupee during the week in review.

The parity ended the week on a stable note. The rupee inched down by one-paisa on the buying counter but did not show any change on the selling counter in the last trading session, trading against the dollar at Rs104.83 and Rs104.84 amid dull activity.

Sluggish domestic stock market activities and persistent capital outflows, weighed down by lingering political uncertainty … kept investors on the sidelines

On week on week basis, the dollar still managed to gain three-paisa on the buying counter and two-paisa on the selling counter against the rupee on the interbank market.

In the open market, the rupee last week came under renewed pressure, with dollar hitting the Rs106 barrier on abrupt rise in demand due to the prevailing political standoff between the government and opposition on the Panama papers issue.

Commencing the week on a negative note, the week ended on a firm note as the rupee to dollar exchange rate remained flat Rs105.80 and Rs106.00 for the third consecutive day in the last trading session.

However, the rupee lost 30paisa against the dollar in the open market on week over week basis.

Against euro, the rupee resumed the week on a steady trend.

The rupee to euro exchange rate traded flat at Rs115.30 Rs116.80 for three straight sessions, unchanged in the third and fourth trading sessions, after the euro had recovered 30paisa on the buying counter and 80paisa on the selling counter in the first two sessions.

However, continuing its downslide versus euro in the last trading session, the rupee posted ten-paisa loss before closing the week at Rs115.40 and Rs116.90, its lowest level in the week against euro.

During the week in review, the euro gained 40paisa on the buying counter and 90paisa on the selling counter against the rupee on week over week basis.

Published in Dawn, Business & Finance weekly, October 31st, 2016