Competing variables were at play in the local currency market last week, as the rupee moved sharply against the dollar.

Monday was the first trading session since the central bank lowered its policy rate by 50 basis points to 9.5pc. However, big rises in the stock market earlier in the week led some currency players to sell dollars and enter into equities, creating an excess supply of the reserve currency for a few days.

As investors adjusted to the rate cut, the rupee expectedly commended the week in the interbank market lower by 46 paisas. The dollar rose to Rs102.20 and Rs102.24, against the prior week’s close of Rs101.74 and Rs101.76.

However, the rupee bounced back in the second trading session, picking up 45 paisas for buying and 44 paisas for selling to send the greenback lower at Rs101.75 and Rs101.78.

The dollar then slipped to Rs101.70 and Rs101.73 in the third trading session after the rupee rose by five paisas. The local currency gained a further 10 paisas in the fourth trading session, as the dollar dropped to Rs101.60 and Rs101.64.

The rupee appreciated by nine paisas against the dollar in interbank dealings but depreciated by around 15 paisas in the open market last week

However, the dollar managed to recover five paisas for buying and three paisas for selling in the last trading session and closed the week at Rs101.65 and Rs101.67. On a net basis, the rupee appreciated by nine paisas against the dollar in interbank dealings.

In the open market, the rupee ended the first trading session unchanged from the prior week’s close of 102.00 and 102.20. It rose by 10 paisas in the second trading session, as the dollar slipped to Rs101.90 and Rs102.10.

But the dollar regained 10 paisas in the third trading session to end the day back at Rs102.00 and Rs102.20.

It rose by a further 10 paisas in the fourth trading session and last changed hands at Rs102.10 and Rs102.30. In the last trading session, the dollar traded remained flat for buying but shed five paisas for selling, and closed the week at Rs102.10 and Rs102.35. During the week, the dollar appreciated by around 15 paisas in the open market.

Against the euro, the rupee commenced the week with a loss of 30 paisas, pushing the single currency up at Rs127.80 and Rs128.05 from the prior week’s close of Rs127.50 and Rs127.75.

The rupee then regained five paisas in the second trading session, as the euro dipped to Rs127.75 and Rs128.00. But the euro managed to gain 35 paisas in the third trading session and ended the day at Rs128.10 and Rs128.35.

The single currency rose by a further 20 paisas and ended the fourth trading session at Rs128.30 and Rs128.55. However, the rupee bounced back in the last trading session by gaining a big 110 paisas, as the euro closed the week at Rs127.20 and Rs127.45. The rupee managed to gain a net 30 paisas against the euro last week.

Published in Dawn, Economic & Business, November 24th, 2014