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Rupee under pressure from dollar

November 18, 2013

THE rupee remained under pressure in the local currency market last week amid dull trading.

Trading in the interbank market was restricted to three days on account of holidays on 9th and 10th Muharram. Most of the market participants stayed on the sidelines, resulting in lower trading volumes.

The rupee commenced the week on a negative note after it lost four-paisa against the dollar, with the greenback ending the first trading session at Rs107.42 and Rs107.44, against the prior week’s close of Rs107.38 and Rs107.40.

The local currency then shed 11-paisa against the dollar in the second session amid quiet trading, as the greenback closed the day at Rs107.53 and Rs107.55.

In the third trading session, the rupee dipped by a marginal one-paisa against the dollar on the buying counter and two-paisa on the selling counter, with the reserve currency closing the week at Rs107.54 and Rs107.57.

The dollar appreciated by a cumulative 17-paisa against the rupee in the interbank market last week. Meanwhile, the rupee has depreciated by 1.4 per cent against the dollar in the past one-and-a-half month.

Trading in the open market was also reduced to three sessions due to the Ashura holidays, and most major market players remained on the sidelines. The rupee commenced the week on a negative note, shedding 10-paisa against the dollar, which ended the first trading session at Rs108.20 and Rs108.40 against the prior week’s close of Rs108.10 and Rs108.30.

The rupee then lost 30-paisa against the greenback in the second trading session, which ended the day at Rs108.50 and Rs108.70. However, the rupee managed to gain 10-paisa against the dollar in the third trading session, as the greenback closed the week at Rs108.40 and Rs108.60.

During the shortened week, the dollar gained 30-paisa against the rupee in the open market. The rupee has depreciated by 7.2 per cent against the global reserve currency in the open market over the past five months.

The rupee fared similarly against the European single currency last week as well. It started the week on a negative note, posting a five-paisa loss against the euro in the first trading session, as the common currency ended the day at Rs143.80 and Rs144.05, against the prior week’s close of Rs143.75 and Rs144.00.

The rupee then managed to gain 30-paisa against the euro in the second trading session, as the European currency ended the day at Rs143.50 and Rs143.75 amid dull trading. However, the euro bounced back in the third trading session after gaining a big 50-paisa against the rupee, and closed the week at Rs144.00 and Rs144.25.

The rupee depreciated by a net 25-paisa against the euro last week. Since July 1, the local currency has depreciated by 9.1 per cent against the euro.

On the international front, the euro rose to $1.3416 in New York’s first trading session of the week. But its gains were capped as investors began to sell from around $1.3400 through to $1.3410.

Meanwhile, the European Commission sees the 18-nation single currency, which hit a two-year high against the dollar last month, gaining 5.8 per cent against a dollar-denominated basket of industrialised economies this year and 0.9 per cent next year.

The euro hit a two-month low of $1.3295 on November 7 after the European Central Bank cut its main interest rate to a record low 0.25 per cent. It was last trading up 0.3 per cent at $1.3414.

A US government holiday on November 11 kept many investors on the sidelines. Against the yen, the dollar gained 0.1 per cent to 99.19 yen. In London, sterling was down 0.25 per cent at $1.5975, although above a low of $1.5904 it had reached earlier in the prior week.

On November 12, the dollar faced resistance at 100 yen and at the September peak of 100.62 yen. It was last up 0.5 per cent at 99.65 yen, with the peak of 99.79 yen, its strongest since September 13.

The euro was up 0.2 per cent at $1.3424 and holding above a two-month low of $1.3295 it had hit on November 7 when it sold off sharply after the ECB’s unexpected interest rate cut. In London, sterling was down 0.4 per cent against the dollar at $1.5930, having earlier hit a two-month low of $1.5854.

On November 13, the dollar dropped to session lows against the euro and the yen in late trading in New York. The euro rose to the day’s high at $1.3495 and was last $1.3487, up 0.4 per cent. Against the yen, the greenback fell to session lows of 99.08 yen. It last changed hands at 99.23 yen, down 0.4 per cent.

In London, sterling rallied against the dollar, up 0.5 per cent at $1.5979, having hit a peak of $1.6003 just after a Bank of England report revealed Britain’s unemployment rate fell to 7.6 per cent in the three months to September.

On November 14, the euro fell as the eurozone reported weakening growth, while the dollar touched a two-month high against the yen after Japan’s finance minister said currency intervention was still a policy option.

The euro was down 0.2 per cent at $1.3456 after climbing to a five-day peak of $1.3497 earlier. The dollar rose 0.6 per cent to 99.84 yen with a peak of 100.04 yen. Sterling rose 0.1 per cent against the dollar to $1.6075 in London. It had earlier hit a session low of $1.5988 after the release of retail sales data.

At the close of the week on November 15, the dollar slid to a one-week low against the euro but rose against the yen in New York trading. The euro was last up 0.3 per cent at $1.3494, after touching $1.3505, its highest since November 7.

However, the yen pushed the dollar to a two-month high, up 0.2 per cent to 100.24 yen, having touched a high of 100.43 yen earlier on, giving it the potential to target the September 11 high of 100.60 yen.

For the week, the dollar gained 1.1 per cent against the yen, its third straight weekly advance, while the euro gained 0.8 per cent against the dollar. In London, sterling extended gains against the dollar for a third straight day, rising to a session high of $1.6133.