VOLATILITY continued to reign supreme in the interbank market last week as the rupee was said to be trading at 18-month lows against the dollar.

Meanwhile, forex dealers said last week they expected the rupee to fall further since it was still being artificially propped up, despite losing almost 3pc value against the reserve currency in two weeks.

On the interbank market, the rupee started the week by losing nine paisas in the first trading session, sending the greenback up at Rs104.33 and Rs104.35 against the prior week’s close of Rs104.24 and Rs104.26.

The rupee shed another 11 paisas for buying and 12 paisas for selling in the second trading session, allowing the dollar to rise further to Rs104.44 and Rs104.47.

The rupee depreciated by 19 paisas against the dollar in interbank dealings but appreciated by five paisas in the open market last week

However, the local currency managed to recover nine paisas in the third trading session, as the dollar slipped to Rs104.35 and Rs104.38 for the day. The rupee continued its gaining streak in the fourth trading session, picking up a further three paisas for buying and four paisas for selling, as the dollar ended the day at Rs104.32 and Rs104.34.

However, the rupee lost 11 paisas in the last trading session, allowing the greenback to close the week at Rs104.43 and Rs104.45. As a result, the dollar appreciated by a net 19 paisas against the rupee last week.

In the open market, the rupee maintained a largely stable trend against the reserve currency. In the week’s first trading session, the rupee-dollar parity stayed unchanged from the prior week’s closing level of Rs104.45 and Rs104.65.

The local currency then managed to pick up five paisas in the second trading session, sending the dollar marginally down to Rs104.40 and Rs104.60. The rupee-dollar parity then remained unchanged at this level for the remaining three trading sessions in the week. As a result, the rupee appreciated by five paisas against the dollar in the open market on a weekly basis.

However, the rupee weakened against the euro last week, despite staying strong in the first three trading sessions.

In the week’s opening trading session, the rupee-euro parity remained unchanged from the previous week’s closing level of Rs116.00 and Rs117.00. The rupee then gained 25 paisas in the second trading, sending the single currency down to Rs115.75 and Rs116.75. The rupee-euro parity then remained unchanged at this level in the third trading session.

However, the euro rebounded in the fourth trading session, recovering 75 paisas to end the day at Rs116.50 and Rs117.50. The euro continued its winning streak in the last trading session as it picked up a further 70 paisas and closed the week at Rs117.20 and Rs118.20.

During the week, the euro managed to appreciate by a net 120 paisas against the rupee.

Published in Dawn, Business & Finance weekly, September 14th, 2015

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