HECTIC trading activity was observed in the local currency market this week.

With the country’s economic and political atmosphere overcast with uncertainties, the rupee has come under tremendous pressure following rise in speculative dollar buying in the open market as well as interbank dealings. At one stage it appeared that the dollar would hit all time high, breaking all records against the rupee in past six decades. Though, the rupee in the last two trading sessions resisted breaching Rs95 barrier against dollar, it still faces free fall in its value.

In 2011-12 so far, the rupee has depreciated by 7.8 per cent against the dollar in almost ten months. It depreciated by three per cent against the dollar alone in May.

On the interbank market, the rupee remained depressed versus dollar throughout this week. It shed 45 paisa in the first trading session at Rs92.25 and Rs92.30 on May 28 after closing last week at Rs91.80 and Rs91.85 on May 26. The rupee further lost 65 paisa and traded at Rs92.90 and Rs92.95 in the second trading session.

The dollar hit new record level at Rs93 in the third trading session when the rupee extended its fall against the dollar for the third consecutive day and traded at Rs93.10 and Rs93.20 after shedding 20 paisa on the buying counter and 25 paisa on the selling counter.

The dollar breached Rs94 barrier on the interbank market in the fourth trading session but closed the day at Rs93.95 and Rs94.00 against the rupee which lost 85 paisa on the buying counter and 80 paisa on the selling counter. Finally in the last trading session, the rupee in the interbank market resisted further decline and staged a mild recovery against the dollar.

It picked up 20 paisa on the buying counter and 15 paisa on the selling counter before closing the week at Rs93.75 and Rs93.85.

On week over week basis, the rupee in the interbank dealings this week suffered losses to the tune of Rs1.95 on the buying counter and Rs2 on the selling counter.

The open market observed volatile trading in dollar. The rupee sank to its lowest level against the dollar, hitting record lows due to massive dollar buying. It was on decline in the open market dealings since past couple of weeks. The central bank governor’s statement regarding the country’s peculiar financial conditions led to speculative dollar buying in the open market towards the close of the week. Mounting dollar demand pushed the rupee to all time lows in over six decades.

The week commenced on a negative note as the rupee shed 10 paisa against the dollar on the buying counter but retained weekend’s level on the selling counter in the first trading session at Rs93.20 and Rs93.40.

The dollar continued its free ride versus the rupee and drifted lower in the second trading session, dropping 30 paisa on the buying counter and 40 paisa on the selling counter and traded at Rs93.50 and Rs93.80. In the third trading session, the rupee slipped by 20 paisa on the buying counter and another 10 paisa on the selling counter to trade at Rs93.70 and Rs93.90.

In the fourth trading session, the rupee posted 60 paisa loss on the buying counter and 70 paisa loss on the selling counter and traded at Rs94.30 and Rs94.60. Finally, the rupee rebounded against the dollar and picked up 20 paisa in the fifth trading session to close the week at Rs94.10 and Rs94.40, still down 1.06 per cent over the previous week.

Versus the European single common currency, the rupee this week continued to trade in narrow ranges. It remained escalated between Rs116.80 and Rs118.30.

In the week’s opening trading session, the parity traded unchanged with the rupee changing hands against euro at previous weekend’s levels of Rs116.80 and Rs117.80. In the second trading session, however, euro climbed slightly higher at Rs117.30 and Rs118.30 after the rupee posted 50 paisa decline against previous day’s close.

The rupee rebounded in the third trading session, recovering 50 paisa against euro which was seen changing hands slightly lower at Rs116.80 and Rs117.80 at the end of the day.

In the fourth trading session, the rupee failed to hold its overnight firmness and drifted lower, slipping against euro by 20 paisa at Rs117.00 and Rs118.00. Finally the week ended on a positive note with the rupee picking up Re.1 against euro in the fifth trading session at Rs116.00 and Rs117.00. This brings net recovery in rupee value against euro to 80 paisa during the week in review.

On the international front, the United States was closed for Memorial Day and there was no trading in New York market on the opening day of the week in review. In Tokyo, however, the euro bounced off two-year lows on May 28, jumping 0.6 percent to $1.2588.The dollar also lost 0.3 percent against the yen, last fetching 79.40 yen. It last traded at 79.48 yen. Sterling rose against the dollar in London and was 0.2 per cent higher against the safe-haven dollar at $1.5695, not far from a two-month low of $1.5630.

On May 29, the euro fell to its weakest level versus the US dollar since July 2010 but it managed to claw back some ground by late trade to $1.2505, still a loss of 0.28 per cent on the day. The session low was $1.2461, the weakest since July 1, 2010. Against the Japanese currency, the dollar traded almost unchanged at 79.45yen. Sterling was steady in London, staying vulnerable against the dollar at $1.5671. It was not far from a two-month low of $1.5630.

On May 30, the euro weakened against the US dollar, slumping to a near two-year low at $1.2360, the lowest since July 1, 2010. It was last at $1.2374, down 0.98 per cent on the day. The dollar hit a three-and-a-half month low of 78.85 yen and was last down 0.53 percent at 79.10. Sterling fell to a four-month low against the dollar in London. It lost 0.5 per cent at $1.5565, breaking below a reported options barrier at $1.5600 to mark its lowest since late January.

On May 31, the euro tumbled to a near two-year low against the dollar, falling as low as $1.2335, the weakest since the beginning of July 2010 and was last down 0.1 per cent at $1.2357. Against the yen, the dollar fell 0.91 per cent to 78.37 yen, hitting a session low of 78.20, a three-and-a-half-month low. The dollar is poised for a monthly loss of 1.8 per cent against the yen. In London, sterling fell 0.6 per cent against the dollar to a low of $1.5360, its weakest since mid-January.

At the close of the week on June 1, the euro came off a 23-month low against the dollar and rose 0.2 per cent to $1.2382, the weakest since July 1, 2010. Earlier, it had climbed as high as $1.2456, after driving it down 7 percent in May. The dollar fell 0.3 per cent to 78.15 yen, after hitting as low as 77.65 yen, the weakest since mid-February. Sterling recovered from a 4-1/2 month low against the dollar and was flat on the day at $1.5395, having fallen to $1.5269, its weakest since mid-January.