Reduced to three trading sessions because of Eid-ul Fitr celebrations, the local currency market showed mixed sentiments as bears remained dominant last week.
The rupee continued its slide against the dollar in the interbank market amid rising demand for the greenback. It posted 10-paisa loss in the week’s opening session and was changing hands at Rs 102.15 and Rs 102.18 versus preceding week’s Rs 102.05 and Rs 102.08.
In the second trading session, the rupee further shed 10 paisa on the buying counter and 12 paisa on the selling counter with dollar climbing further to Rs102.25 and Rs 102.30. Closing the week on a negative note, the rupee inched down against the dollar in the last trading session, posting five paisa loss at Rs 102.30 and Rs 102.35.
During the week, the dollar in the interbank dealings appreciated against the rupee by around 27 paisa on cumulative basis.
In the open market, the rupee came under renewed pressure and traded range bound against the dollar. Commencing on a positive note, the rupee posted 20 paisa gain in the first trading session, changing hands at Rs 102.20 and Rs 102.40 in relation to the dollar. The dollar had closed the preceding week at Rs 102.40 and Rs 102.60.
However, the local currency was unable to protect its overnight firmness in the second trading session and lost 10 paisa to up the greenback slightly higher at Rs 102.30 and Rs 102.50. Some hectic dollar buying ahead of three days holiday from August 8 to August 10 led to another 50-paisa decline in the rupee value in the third trading session that sent the dollar to the week’s highest level at Rs 102.80 and Rs 103.00. In the three trading sessions last week, the dollar in the open market appreciated by 40 paisa on net basis versus the rupee.
In the past six weeks since June 28, the rupee has posted a steep fall of Rs 3.40 against the dollar in the interbank market. In the open market the cumulative loss in the same period was slightly lower at Rs 2.65.
At the same time, the gap between buying/selling rates has widened from two paisa to five paisa in the interbank market while it has remained almost unchanged at 20 paisa in the open market. The differential between the open market and interbank dollar rates in the past six weeks has narrowed to 65 paisa from Rs1.69.
The State Bank of Pakistan, meanwhile, is making efforts to normalise dollar rates through policy measures. Analysts also hope that the rupee will surely improve in coming months. For the time being, the dollar is likely to oscillate between Rs102 and Rs104.
Against the euro, the rupee perked up again last week as the rupee to euro exchange rate moved up in the first trading session by 25 paisa to Rs 134.50 and Rs 134.75 against the preceding weekend’s Rs 134.75 and Rs 135.00.
However, the rupee’s rally against the euro lost some steam in the second trading session that enabled the currency to climb back to the preceding weekend’s position after the rupee shed 25 paisa against the currency. In the third trading session the rupee further weakened against euro when it hit last week’s sessions’ peak and closed the week at Rs 135.20 and Rs 135.50 after posting 50 paisa loss against the euro, ahead of Eid-ul-Fitr holidays. In the three sessions’ week, the rupee suffered a net loss of 75 paisa against the euro.
On the international front, the dollar has lost three per cent versus major currencies since its high on July 9. In the New York first trading session, the dollar fell against the yen after previous weekend US jobs figures lowered expectations that the Federal Reserve would start to buy fewer bonds in the near term. But losses were limited. It fell 0.7 per cent to 98.28 yen, trading in a narrow range between 98.23 yen and 99.15 yen. The euro slipped 0.2 per cent against the dollar at $1.3258, below last week's peak of $1.3344. Sterling rose against the dollar in London trade, gaining 0.2 per cent at $1.5325, having hit a session high of $1.5380.
On August 6, the dollar fell broadly, hitting a six-week low against the yen as investors pared back bets on the US currency on uncertainty about when the Federal Reserve will start reducing its bond purchases. It fell as low as 97.51 yen, its lowest since June 26 and last traded down 0.6 per cent at 97.72 yen. The euro rose 0.4 per cent to $1.3307 on news of a surge in factory output in Britain and Germany.
The dollar had briefly pared losses in early trading. Sterling rose 0.2 per cent against the dollar to $1.5377 in London trade. But gains were limited and it stayed pinned below $1.5435, the late July peak.
On August 7, the dollar fell to a seven-week low, weighed down by steep losses against the yen which rose against the dollar on expectations that Japanese investors would convert overseas earnings ahead of a mid-August holiday.
It came under pressure as a break of 97.50 yen sparked stop-loss dollar selling, which pushed it to a low of 96.41 yen, its lowest level since June 20. It was last trading down 1.1 per cent at 96.64 yen. The euro was up 0.2 per cent at $1.3326 against the dollar. Sterling also gained against the greenback, climbing to its highest in one-and-half months. It was last up 0.7 per cent at $1.5446, recovering smartly from the intra-day low of $1.5205 plumbed shortly after the inflation report in London.