Last week, the dollar in international trade hit its highest level against a basket of major currencies in nearly 14 years after the Federal Reserve raised interest rates for the first time this year, further signalling a faster pace of increase in 2017.

Since the US election in early November, the dollar has strengthened broadly on expectations for President-elect Donald Trump’s fiscal stimulus and stronger US growth.

The dollar advanced about 1.2pc last week after the US central bank lifted rates earlier in the week and raised its projection to from two rate increases in 2017 to three.

Euro weakness against the dollar resumed after last week’s European Central Bank meeting, and accelerated after the Fed decision on rates.

It landed near $1.04 after hitting its lowest level against the dollar since 2003 earlier in the day.

Commencing the week on a stable note the rupee, however, closed the week in minus

against the dollar

The euro has surprisingly strengthened after Italy voted against constitutional reform in early December.

At the same time, the Sterling sank to an almost three-week low against the dollar last week after the Federal Reserve’s decision, leading to a wave of dollar buying in US that tumbled into the morning session in Europe.

In the local currency market, the rupee/dollar parity showed minor changes last week on the interbank market, where the rupee maintained a firm trend against the dollar amid fluctuations.

In the open market, however, the rupee remained under pressure on dollar strength while euro weakened against the rupee amid modest fluctuations and is currently trading close to a two-year low.

The week, shortened to four-day trading sessions on account of Eid-Milad-un-Nabi, witnessed lacklustre trading activity.

In the last trading session, the rupee inched down by one-paisa before closing the week against the dollar at Rs104.85 and Rs104.86.

In the open market, the rupee showed a weakening trend against the dollar.

Commencing the week on a stable note, the rupee, however, closed the week in minus.

In the last trading session, the dollar rebounded sharply against the rupee to trade at Rs107.50 and Rs107.80 after gaining ten-paisa on the buying counter and 20paisa on the selling counter.

Against the dollar, the rupee lost 30paisa on the buying counter and 40paisa on the selling counter in the open market during the week.

Against euro, the rupee strengthened last week, hovering in narrow range between the low of Rs113.70 and Rs115.20 and high of Rs112.00 and Rs113.50, amid modest fluctuations.

The rupee closed the week flat against the euro at Rs112.00 and Rs113.50 for the second consecutive day in the last trading session.

During the week, the rupee gained 100paisa against the euro on week on week basis.

Published in Dawn, Business & Finance weekly, December 19th, 2016