The rupee maintained its strength over the dollar, moving both ways in a narrow band. In the inter-bank market, sufficient dollar supply of dollar amid low demand resisted any major decline in rupee-dollar parity. Dull activity persisted throughout the week in the absence of any major development.

During the week in review, the rupee in the inter-bank market touched its highest level against the dollar at Rs57.17 and Rs57.19 on November 20 and its lowest level at Rs57.24 and Rs57.26 on the opening day of the week on November 17. The rupee closed the week at Rs57.18 and Rs57.20 on November 21, showing 8 paisas gain over the previous weekend levels of Rs57.26 and Rs57.28.

In kerb trading, the parity showed a fluctuating trend. The rupee commenced the week on a positive note and gained 5 paisas trading at Rs57.15 and Rs57.20 against the dollar on November 17. The rupee, however, shed 5 paisas on November 18, and traded at Rs57.20 and Rs57.25. Short dollar supply amid rising demand ahead of Eid-ul-Fitr exerted slight pressure on rupee, which shed 10 paisas on November 19, with the dollar changing hands at Rs57.25 and Rs57.35, the lowest level in the week. However, improved supply of dollar in the last two trading sessions helped the rupee gain 15 paisas to trade at Rs57.20 and Rs57.25 on November 21. At this level, the rupee did not show any change compared to previous week close.

Against the European common currency the rupee displayed strength throughout the week. After opening the week on a negative note, when rupee shed 20 paisas against the euro, it recovered 10 paisas on November 18. The rupee, however, suffered another big decline against the euro on November 19, when it lost 90 paisas breaching Rs68 barrier for the first time during the week. However it recovered 110 paisas in the last two trading sessions. At close the euro was trading at Rs67.60 and Rs67.90 on November 21, still down 55 paisas over the previous week close.

The rupee at the inter-bank forex counter, continued to display losses versus the British pound, the Canadian, Australian and New Zealand dollars, the Swiss franc, the Danish and Norwegian krones and the Swedish krona. It recovered from previous week losses against the Japanese yen, the Singapore dollar and the Korean won. It extended further gains versus the Hong Kong dollar, the Chinese yuan, the Malaysian ringgit, the Thai bhat, the Kuwaiti dinar, the Saudi and Qatari riyals and the UAE dirham.

On the international front, the dollar rose against the euro, yen, and commodity currencies on November 17, as a steep sell-off in the Japanese stocks overnight set the tone for the greenback’s generally positive performance for most of the session. Reports that al Qaeda had threatened the US allies, including Japan, triggered a sharp drop in the Nikkei stock indeed and a sharp fall in the yen across the board. The greenback also rallied steeply against the Australian and Canadian dollars as traders took profits and moved higher against the euro as well after the single European currency ran into some profit-taking above $1.1830. The euro earlier reached a three-week high against the dollar amid the terror attack threat report.

The US currency earlier slipped to a two-week low against the Swiss franc, traditionally a safe-haven currency in time of global turmoil, before coming off lows as investors booked profits on the franc. In late New York trade, the euro was down 0.2 per cent on the day at $1.1754. Against the yen, the dollar rose 0.5 per cent to 108.89 yen. Against the Swiss franc, the dollar was at 1.3236 francs, down 0.2 per cent on the day. The pound rose against the dollar to $1.6918. The greenback rose sharply against the Canadian dollar at C$1.3105.

The Aussie dollar also fell over 1 per cent against the US currency to US$0.7111 on profit-taking after sharp gains in the previous week. Sterling fell to a three-week low against the euro weighed down by scaled-back talk of an imminent UK rate hike, while it tracked the single currency higher against the dollar. Sterling stood at 69.77 pence per euro having earlier fallen to 69.96. Against the dollar it stood at $1.6895 having risen to $1.6932 earlier.

The dollar took a beating on November 18 after the US commerce Department said it would limit imports of Chinese clothing, fuelling fears that protectionism could undermine a nascent US recovery. Early in the session, the euro climbed to a record high $1.1959 against the dollar as markets braced for gains above $1.20. The greenback fell more than 2 per cent versus the Swiss franc and extended its decline against the Australian dollar.

In late New York trade, the euro was up 1.66 per cent on the day at $1.1946. New York-based traders also said some of the move against the dollar came as the euro breached a key technical level of $1.1860, prompting investors to step in quickly and buy. Against the yen, the dollar fell 0.8 per cent to 108.04 yen. Against the Swiss franc, the dollar was at 1.2937 francs, down more than 2 per cent. The Australian dollar rose 1.7 per cent to US$0.7231 near its six-year high, after recovering from overnight losses. The pound, meanwhile, rose 0.6 per cent against the dollar to $1.7010.

Sterling rose to 2-1/2 week highs against the broadly weaker dollar but fell to one-month lows on the euro, after lower than the expected UK inflation dealt another blow to rate hike expectations. Sterling had weakened as far as 70.01 pence per euro, its worst level since mid-October, and was trading down three-quarters of a per cent. Against the dollar, it strengthened to $1.7011, its highest since October 30.

On November 19, the dollar advanced from a record low against the euro drawing support from a rally in the US stock market and on profit-taking from gains in the single European currency a day earlier. The greenback also rallied from a 3-year low of 107.58 yen when rumours Japan was buying dollars spooked traders who had been selling the US currency aggressively earlier. Japan stepped into the market following the yen’s rise to 107.87 per dollar.

In late US trade, the euro was down 0.6 per cent at $1.1881, after touching a record $1.1977 earlier. The dollar was up over one per cent at 109.26 yen. The greenback gained over one per cent to 1.3040 Swiss francs. The pound was down 0.2 per cent at $1.6981. The dollar suffered an abrupt, broad sell-off when a US Commerce Department official said the United States would put quotas on Chinese textile imports, causing analysts to fret that more protectionist US policies might brake economic growth in the world’s biggest economy.

Sterling briefly hit a five-week low on the euro and grazed a two-week high versus the dollar after the single currency set record highs on the greenback, paying little attention to a Bank of England report. Sterling had versed its gains on the dollar as the greenback scrabbled higher against the euro. Sterling was down nearly a quarter per cent on the day at $1.6981.