The week commenced on a negative note. Persistent dollar demand was seen pressurising the rupee downward in the inter-bank market, where it traded at Rs57.91 and Rs57.92 on September 29, falling 2 paisa versus the dollar.

The demand for dollar remained slightly higher in the first trading session as some local and foreign banks were buying dollars to cover their payments requirement. But the rupee managed to stage a recovery on September 30, on easy dollar supply and gained 3 paisa for buying and two paisa for selling to trade at Rs57.88 and Rs57.90.

Dollar supply further improved in the inter-bank on October 1, which helped the rupee inched up against the dollar to trade at Rs57.87 and Rs57.89, up one paisa. Further increase in dollar supply amid lack of dollar demand helped the rupee maintain its upward rising trend on October 2. The rupee gained 7 paisa versus the dollar, which traded at Rs57.80 and Rs57.82. Excess dollar supply on October 3, helped the rupee to gain further 8 paisa, touching week’s highest level versus the dollar at Rs57.72 and Rs57.74. This showed a 19-paisa recovery in rupee value over the week’s opening level and 17-paisa gain over the previous weekend’s level of Rs57.89 and Rs57.90.

In kerb trading, the rupee recovered 2 paisa on the opening day on smooth dollar supply and traded at Rs58.0 and Rs58.08 on September 29. It continued it surge on September 30, and gained another 5 paisa for buying and 3 paisa for selling to trade at Rs57.95 and Rs58.05 versus the dollar. The parity remained unchanged in the following two days due to balanced demand and supply. However, it lost 5 paisa for buying on October 3, amid sluggish activity in the kerb, when dollar changed a hands at Rs58.0 and Rs58.05. During the week, however, the rupee gained 5 paisa for selling and maintained its previous weekend’s stable position for buying.

The European single currency continued its high ride over the rupee during the week after a smart recovery by the rupee on the opening day of the week. On September 29, the rupee managed to gain 20 paisa over the euro and traded at Rs65.90 and Rs66.20. But the recovery proved short lived. Continued demand for euro in the local market exerted pressure on the rupee, pushing it down by 130 paisa in single day trading on September 30. The euro was quoted at Rs67.20 and Rs67.50.

The declining trend in rupee value persisted in the following two days. There was a cumulative decline of 35 paisa in rupee value against the euro in two days. On October 2, the euro was seen changing hands at Rs67.55 and Rs67.85. The rupee, however, managed to recover 20 paisa against the euro on October 3, when it traded at Rs67.35 and Rs67.40. At this level the rupee showed a depreciation of 145 paisa versus the euro against the opening week’s level. Compared to previous week close, the rupee was down by 115 paisa.

Against other major currencies, the rupee at the inter-bank forex counter showed mixed trend. It extended losses versus the British pound, the Swiss franc, the Canadian, the Australian, the New Zealand, the Hong Kong and the Singapore dollars, the Japanese yen, the Swedish krona, the Danish krone and the Thai bhat. However, the rupee gained strength over the Norwegian krone, the Chinese yuan. the Malaysian ringgit, the South Korean won, the Kuwaiti dinar, the Saudi and Qatari riyals and the UAE dirham.

In the international financial market, the dollar tumbled against major currencies on the opening day of the week, hitting a three-month low against the euro, in technically-driven trade amid rumours of position-squaring by some hedge funds. The euro rallied to a fresh three-month high above $1.16 against the dollar. In late New York trade, the euro was up 1.12 per cent at $1.1595. Against the yen, the dollar declined to a new near three-year low around 110.76 yen, before edging up to 110.81 yen.

Last week, the dollar fell below 111.0 yen in the wake of a Group of Seven statement calling for more currency flexibility. Against the Swiss franc, the dollar was at 1.3264 francs, down 1.34 per cent on the day amid talk a Swiss bank sold the greenback at 1.3360-1.3370 francs. Sterling was up 0.39 per cent at $6650.

Traders noted rumours of major position-squaring on the euro by several hedge funds. This caught the market on the hop, as investors were short on the euro at $1.1450 and long on the dollar. Traders in London also cited hedge fund activity, with one US hedge fund coming in with a huge order and spreading it around three or four banks.

Sterling recouped earlier losses on the dollar but gave up highs on the euro on the lacklustre UK consumer data. The pound was 0.1 per cent lower against the dollar at $1.6570, off last week’s 2-1/2 month high of $1.6630 but back from session low of $1.6453.

On September 30, the dollar rebounded against the yen in a whiplash move as Japan intervened during New York trade to weaken the yen after the dollar had sagged to a three-year low. The greenback remained lower on the day against many other rivals, still smarting from weaker-than-expected US economic data earlier in the session in New York, the euro was off its earlier session highs above $1.17, but up 0.61 per cent on the day to $1.1662. Against the yen, the dollar was up 0.58 per cent to 111.44 yen, after falling to a three-year low of 110.12 yen.

Against the Swiss franc, the dollar was at 1.3172 francs, down 0.60 per cent. The pound declined 0.19 per cent to $1.6660. The dollar was bashed against a slew of major rivals, sinking to five-year lows against the Australian dollar, and down 1 per cent against the Swiss franc.

Sterling soared to a three-month high against the dollar and fell sharply versus the euro swept away by a massive fall in the US currency. The pound was also briefly weakened versus the battered dollar, after Britain’s current account data showed an unexpected record deficit in the second quarter. Sterling traded at $1.6605 against the dollar, down from three-moth peaks of $1.6760 set earlier in the session. The pound was down 0.8 per cent from the previous session’s close against the euro at 70.11. Meanwhile, the euro was half a per cent up on the dollar from its previous close.

On October 1, the dollar retreated against the yen as traders remained alert for possible Bank of Japan intervention to weaken the Japanese currency after its aggressive action overnight. A weaker-than-expected US manufacturing report also weighed on the dollar as the data under-scored doubts about the pace of economic rebound in the United States.

The euro rose 0.6 per cent on the day to $1.1726. Against the yen, the single European currency slipped around 0.3 per cent to 129.60 yen. The dollar was down 0.8 per cent against the yen at 110.56 yen. Against the Swiss franc, the dollar fell 0.3 per cent to 1.3126 francs. The pound was up 0.5 per cent to 41.6690.

Sterling fell to a new two-week low against a buoyant euro as positive data on Britain’s manufacturing and retail sectors failed to aid the pound in the face on broad euro strength. Investor focus still remained on how the dollar, under pressure on concerns about the US recovery, would perform against the euro and the yen. It had fallen to 70.60 pence per euro from 70.13 in late New York.