Sliding rupee

Published Jun 11, 2012 12:01am

IN the local currency market, the rupee remained under tremendous pressure against major currencies.

Uncertain political situation, growing unrest among large population due to gas and power loadshedding and weak macroeconomic indicators have negatively impacted forex inflows as well as domestic and foreign investments in the country.

Speculators anticipate the rupee will continue to weaken against dollar in coming weeks. It is already hovering around Rs95 in the open market, while it has crossed Rs94 in the interbank dealings this week. Strong dollar demand in the local market is exerting downward pressure on the rupee.

On the interbank market, the rupee weakness over dollar persisted throughout this week. It lost 16 paisa in relation to the dollar for buying and another 11 paisa for selling in the first trading session as dollar climbed to Rs93.91 and Rs93.96 on June 4 against previous week close of Rs93.75 and Rs93.85.

The rupee further extended its overnight weakness against the dollar in the second trading session and last traded at Rs94.10 and Rs94.12 after posting fresh losses on June 5; 19 paisa on the buying counter and 16 paisa on the selling counter.

In the third trading session, the rupee downslide versus dollar persisted for the third successive day. In this session, the rupee suffered five paisa loss on the buying counter and another eight paisa loss on the selling counter with dollar changing hands at Rs94.15 and Rs94.20.

In the fourth trading session, however, the rupee managed to recover overnight losses against the dollar, gaining five paisa at Rs94.10 and Rs94.15. The rupee finally ended the week on a negative note as it shed eight paisa on the buying counter and another seven paisa on the selling counter and traded against the dollar at Rs94.18 and Rs94.22. This week, the dollar in the interbank market gained 27 paisa against the rupee.

In the open market, the rupee this week resisted sharp fall while continuing its downward movement against the dollar. During the week it traded between the low of Rs94.10 and Rs94.80 on the buying counter and the high of Rs94.30 and Rs95.0 on the selling counter.

On the opening day of the week, the rupee moved both ways against the dollar while trading unchanged at its previous weekend level on the buying counter but recovered 10 paisa on the selling counter before closing the first trading session at Rs94.10 and Rs94.30 as against last week close of Rs94.10 and Rs94.40. On June 5, the rupee drifted lower in relation to the dollar and traded at Rs94.20and Rs94.40 after shedding 10 paisa in the second trading session.

It further extended its overnight weakness in the third trading session when it posted 30 paisa loss over the previous day close, pushing dollar at Rs94.50, and Rs94.70. In the fourth trading session, the rupee again hit Rs95 barrier after it suffered 30 paisa decline for the second day in a row with dollar changing hands at Rs94.80 and Rs95.00 at day close.

As strong demand for dollars persisted in the open market in the last trading session, the rupee further slipped by 30 paisa and closed the week at Rs95.10 and Rs95.30 on June 8. During the week in review, the dollar in relation to the rupee gained 70 paisa on the buying counter and 60 paisa on the selling counter in the open market.

Versus the European single common currency, the rupee this week came under slight pressure while trading in a narrow band.

It commenced the week on a steady note, trading unchanged in the first trading session at its previous weekend’s levels of Rs116.50 and Rs117.50. The rupee continued its downward movement versus euro, shedding 50 paisa in the second trading session and changing hands at Rs117.00 and Rs118.00. The rupee downslide persisted for the third consecutive day on June 6 as it suffered 40 paisa loss in the third trading session, pushing euro at Rs117.40 and Rs118.40.

The rupee further extended its overnight weakness in the fourth trading session after euro rebounded in the international financial market, making smart recovery globally.

In the local market, however, the rupee slipped against euro by Rs1.10 in single day trading at Rs118.50 and Rs119.50. In the last trading session, however, the rupee gained 50 paisa in terms of euro, ending the week on a positive note at Rs118.00 and Rs119.00. On cumulative basis, the rupee this week suffered a loss of Rs1.50 against the European single common currency.

On the international front, the euro rebounded from last week’s record lows against the dollar and yen in New York’s first trading session. It last traded 0.5 per cent higher at $1.2498, up from $1.2286 on June 1, its lowest since July 2010. Against the yen, the dollar rose 0.4 per cent to 78.34 yen, off weekend’s trough of 77.65yen, its lowest since mid February. Sterling was 0.1 per cent higher at $1.5376 in London trade.

On June 5, the euro dropped against the dollar, last down 0.4 per cent at $1.2452 but well above last weekend’s two-year low of $1.2286. The dollar was up 0.5 per cent at 78.74 yen, above 3-1/2-month low of 77.65 yen hit last weekend. Against the dollar, sterling opened early Europe at $1.5397 and closed in New York at $1.5383, off best recovery levels of $1.5416. Rate initially dipped in early Asia to mark session lows at $1.5376.

On June 6, the euro jumped sharply against the dollar and yen in choppy trading after the European Central Bank left both interest rates and the outlook for economic growth unchanged. The euro was last up one per cent against the dollar at $1.2574 after hitting a peak of $1.2581, the highest since May 28.

That is well above a near two-year low of $1.2286 hit last weekend. Against the yen, the dollar was up 0.6 per cent 79.24 yen. Sterling rose against a broadly softer dollar in London. It rose 0.6 per cent on the day to $1.5471, pulling away from a five-month low of $1.5269, hit last week.

On June 7, the dollar edged slightly higher against the euro in choppy trading in New York session as euro was last trading at $1.2564, down 0.1 per cent on the day. The euro earlier peaked at $1.2625, its highest level since May 23. The dollar was trading 0.5 percent higher at 79.58 yen after posting a session peak of 79.78, also the highest since May 23. Sterling rose to a one-week high against the dollar in London trade, up 0.6 per cent at $1.5575 having earlier hit $1.5601, its strongest since May 30.

At the close of the week on June 8, the euro fell against the dollar and was last down 0.6 per cent at $1.2485, retreating from a two-week high of $1.2625 hit on June 7.

It was still up 0.5 per cent for the week, its first weekly gain after 5 straight weeks of losses.

The safe-haven Japanese currency gained broadly as market sentiment declined, with the dollar losing 0.2 per cent to 79.48 yen. Sterling retreated from a one-week high against the dollar in London trade and was down 0.7 per cent at $1.5415, off a one-week high of $1.5601 struck a day earlier.

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