In the local currency market, the rupee’s stability against the dollar persisted last week in the absence of leading currency players who remained in the sidelines amid lacklustre trading activity.

The central bank provided a major incentive to exchange companies by exempting them from surrendering 10pc of dollars to the banking system against their exports of other foreign currencies in order to reduce the gap between the interbank and open market rates in the range of 50-70paisa from the Rs3.60 that prevailed in mid-January.

So far, the incentive has not provided much relief as private exchanges have not been able to reduce the gap between the two rates below the current Rs2.36. The IMF sees modest rupee weakness going forward.

The rupee remained range-bound amid less dollar buying from importers due to dull activity on the interbank market last week.

The rupee retained its overnight level in the last trading session, closing the week unchanged against the dollar at Rs104.83 and Rs104.84 for the second day in a row.

The rupee ended the week in minus as the euro continued its upward march

Against the rupee, however, the dollar on the interbank market posted five-paisa gain on the buying counter and four-paisa gain on the selling counter on week on week basis.

In the open market, the rupee/dollar parity showed a stable trend last week as traders remained on the sidelines amid lacklustre activities.

The rupee did not show any change in the first four trading sessions and traded flat at Rs107.10 and Rs107.30, holding its weeks’ long levels against the dollar.

In international trade, the dollar gained against most major rivals, jumping to one-month highs in the week as investors took profits after building on two weeks of gains supported by renewed optimism for fiscal measures following President Trump’s comments on tax reforms last week.

In the last trading session, the rupee managed to pick up ten-paisa after trading unchanged against the dollar for first four trading sessions. As a result, the dollar slipped to 11-week lows at Rs107.00 and Rs107.20 at the close of the week to a level last seen on Dec 6, 2016.

In international trade, however, the dollar was mostly higher against major rivals with the dollar index recording a second straight weekly advance.

During the week in review, the dollar in the open market lost ten-paisa against the rupee.

Against euro, the rupee last week remain escalated, trading range bound between Rs112.80/113.75 on the buying counter and Rs114.30/115.25 on the selling counter, after snapping winning streak for nine consecutive sessions in the previous two weeks.

Commencing the week in plus, the rupee ended the week in minus as the euro continued its upward march for the third successive day, gaining 15paisa in the last trading session, it hit the week’s highest level before closing the week at Rs113.75 and Rs115.25.

During the week, the rupee, however, managed to gain five-paisa against the euro on week on week basis.

Published in Dawn, Business & Finance weekly, February 20th, 2017