DIVERGENT trend was witnessed in the local currency market last week as politics overshadowed the trading activities where the dollar displayed strength against the rupee amid mounting month-end dollar demand owing to buying pressure for import and corporate payments.

Commencing the week on a negative note, the rupee traded in minus against the dollar in the first four trading sessions in the interbank market, owing to persistent high demand amid lower greenback against major currencies overseas.

The rupee initiated in a narrow band of Rs104.77 and Rs104.79 against the dollar in the first trading session on the interbank market. It inched down by one paisa on the buying counter and shed another two paisas on the selling counter against the prior week close of Rs104.76 and Rs104.77.

Extending overnight losses against the dollar, the rupee in the second trading session dipped by four paisas loss and resumed lower at Rs104.81 and Rs104.83, a level last seen on Feb 18, this year.

Continuing its losing run against the dollar for the third straight day, the rupee shed three paisas on the buying counter and two paisas on the selling counter, hitting a nine-week low at Rs104.84 and Rs104.85 in the third trading session.

However, the week ended on a plus note as the rupee in the last trading session picked up four paisas on the buying counter and another three paisas on the selling counter, following tight monitoring by the SBP to ensure stability of the local currency, closing the week against the dollar at Rs104.80 and Rs104.82.

In the open market, the rupee extended its firmness against the dollar, maintaining its month-long stability.

The week commenced on a stable note as the rupee traded flat against the dollar at Rs105.10 and Rs105.30 in the first trading session, unchanged from the last closing levels.

Extending its gain against the American currency in the second trading session, the rupee firmed up further by five paisas to close at Rs105.05 and Rs105.25.

During the week, however, the rupee gained ten-paisa against the dollar in the open market, trading between the high of Rs105.00/105.20 and the low of Rs105.10/Rs105.30. During April, however, the dollar depreciated by 40 paisas against the rupee, initiating in a band of Rs105.40 and Rs105.60.

Against euro, the rupee continued to weaken for the second consecutive week, trading in narrow ranges. Snapping previous weekend winning run, the rupee commenced last week in minus. It dropped 15 paisas against the last closing at Rs117.60 and Rs118.60 and traded at Rs117.75 and Rs118.75 in the first trading session.

During the week, the rupee suffered a net loss of Rs1.50 against euro which initiated the week in a band of Rs117.75 and Rs118.75. In April on a month-on-month basis, the rupee appreciated by 40 paisas against euro, trading between the high of Rs117.75/118.75 and low of Rs119.50/Rs120.50 amid fluctuations.

Published in Dawn, Business & Finance weekly, May 2nd, 2016