MOUNTING demand for dollar in the local currency market and the strengthening value of the US currency in the international financial market kept the rupee under pressure this week.
The rupee witnessed a sharp decline during the week, both in the open and interbrain markets, where dollar hit historic highs after breaching Rs93 and Rs92 barriers respectively.
It is now heading for new peak. Most analysts fear that if dollar rollercoaster ride continues, the rupee is likely to set new records in coming week on the pressure of macroeconomic indicators.
The rupee has already depreciated against the dollar by almost seven per cent in little over past ten months.
Dollar buying is seen on rise in the local currency market.
Besides uncertain political situation, widening current account deficit, excessive government borrowings, repayment of AMF loan and proposed cut in next year US aid have added to the pressure on the rupee.
Against the dollar, the rupee hit new lows at Rs92.20 in the interbrain market and Rs93.70 in the open market this week.
On the interbrain market, the rupee commenced the week against dollar on negative note, shedding up to 38 paisa over the previous weekend to trade at Rs91.30 and Rs91.35 in the first trading session after closing last week at Rs90.93 and Rs90.97.
The rupee further extended its overnight losses on persistent demand for the greenback, which was seen changing hands at Rs91.54 and Rs91.58 after the rupee posted up to 24 paisa decline in the second trading session.
Continued downslide in the rupee/dollar parity in the third trading session resulted in 47 paisa decline in the rupee value while dollar climbed at Rs92.0 and Rs92.05.
In the fourth trading session, the rupee crossed Rs92 barrier, hitting new lows versus dollar at Rs92.10 and Rs92.20 on the interbrain market, down 10 paisa on the buying counter and 15 paisa on the selling counter.
In the open market, the dollar was seen on a rollercoaster drive against the rupee this week.
Strong dollar demand pushed the rupee to historic lows. The rupee had only last week crossed Rs92 barrier against dollar.
As a result of continued extensive dollar buying this week, it hit another new peak, breaching Rs93 barrier, in less than a fortnight, while the dollar is still rising.
After closing last week at Rs92.00 and Rs92.20, the rupee further shed 10 paisa against the dollar in the first trading session of the week in review, changing hands at Rs92.10 and Rs92.30.
The rupee continued its downtrend versus dollar in the second trading session, losing another 35 paisa to trade at Rs92.45 and Rs92.65.
In the third trading session, the dollar was quick to hit historic highs against the rupee at Rs93.20 and Rs93.40.
The rupee lost 75 paisa in this session.
The downtrend in the rupee/dollar parity persisted in the fourth trading session as the rupee further lost 10 paisa on the buying counter and 70 paisa on the selling counter, pushed dollar to record high at Rs93.30 and Rs93.70.
Versus the European single common currency, the rupee in the local currency market traded in narrow band, amid mild fluctuations, as the euro hovered just above its 22-month low against the dollar and remained vulnerable to fur-ther declines in the international financial market this week.
The week commenced on a positive note as the rupee extended its weekend firmness in the first trading session, picking up 10 paisa versus euro to trade at Rs117.40 and Rs118.40 as against previous week close of Rs117.50 and Rs118.50.
But in the second trading session, the parity reversed to the previous weekend position and traded at Rs117.50 and Rs118.50 after the rupee posted 10 paisa decline against euro.
The rupee continued its downslide for the second day in a row after it sharply lost 30 paisa in the third trading session and traded at Rs117.80 and Rs118.80 against euro.
In the fourth trading session, the rupee, however, recovered 30 paisa versus euro which slipped back to previous weekend’s level of Rs117.50 and Rs118.50.
On the international front, the euro edged higher against the US dollar in New York first trading session. The euro was last at $1.2817, after rising as high as $1.2824, almost two cents above previous weekend’s low of $1.2640.
It has fallen more than three per cent so far this month.
The dollar gained 0.4 per cent to 79.31 yen, well above a three-month low around 79.00 set last weekend. In London, sterling was steady against the greenback at $1.5825.
On May 22, the euro slumped 1 per cent against the US dollar to $1.2686, having fallen as low as $1.2656 and edging back down towards last week’s four-month low of $1.2640.
The dollar rallied 0.9 per cent to 79.99 yen. The yen has been trading very strongly based on over-all uncertainty over the last couple of weeks.
In London, sterling fell sharply against the dollar to a session low of $1.5764 from around $1.5832.
On May 23, the euro slumped to its weakest against the dollar in nearly two years at $1.2544, its lowest level since July 2010.
It was last at $1.2594, down 0.7 per cent. The yen also gained, with the dollar falling 0.7 per cent to 79.47 yen Sterling hit a two-month low against the dollar in London trade, last down 0.4 per cent at $1.5703, paring losses after hitting a session low of $1.5677, its lowest since mid-March.
On May 24, the euro surrendered gains against the dollar in volatile trading and was last down 0.1 per cent at $1.2569 between the session peak of $1.2619 and the session low of $1.2514.
Against the yen, the greenback was steady at 79.38 yen. Sterling edged up from a two-month low against the dollar in London, dropping briefly around $1.5648, before paring losses to last trade up 0.2 per cent on the day at $1.5710.
Earlier in the session it hit a two-month low of $1.5639.