The local currency market continued to witness dull activity due to insignificant demand for foreign exchange last week.
Both the interbank as well as open market remained dull as leading market participants kept themselves on the sidelines.
The demand from the importers and the corporate sector was almost dull which kept the dollar away from surging against the rupee.
Both interbank as well as open markets remained dull
At the same time, a closely watched US dollar index hovered near a 15-month low against its rivals in overseas trade last week which also restricted rupee fall in the local currency market.
The flatness in dollar value against local currency can also be attributed to dull bills on value-added imports by export-oriented sectors.
The commercial banks’ role in controlling dollar inflow/outflow also kept the rupee in the firm zone in interbank dealings while strict SBP monitoring helped the rupee from falling against the dollar in the open market.
On the interbank market, the rupee-to-dollar exchange rate showed a steady trend.
During the week, the rupee traded in a narrow band amid sluggish dollar demand.
On Monday the rupee was seen changing hands at Rs105.38 and Rs105.40 against the last closing level of Rs105.39 and Rs105.40.
On Tuesday, the rupee reverted back to the prior weekend level of Rs105.39 and Rs105.40 to trade unchanged against the dollar on the selling counter for the second straight day.
The parity traded flat amid low demand and easy supply of dollar in the following three sessions, closing the week unchanged at Rs105.39 and Rs105.40 on insignificant demand from corporate sector and dull imports payments.
In the open market, the dollar remained dull in value against the rupee, suffering significant losses during the week.
The rupee traded in plus throughout the week.
On Monday the rupee turned positive which pushed the dollar down to Rs107.30 and Rs107.50 from the prior weekend level of Rs107.50 and Rs108.00.
On Tuesday the rupee continued to trade flat at Rs107.30 and Rs107.50.
On Wednesday, the rupee posted fresh gain as a result of which the dollar slipped further to Rs107.20 and Rs107.40.
The rupee recovered on Thursday pushing the dollar to a two-week low at Rs106.80 and Rs107.00.
On Friday the rupee further extended overnight firmness sending dollar to almost a three-week low at Rs106.70 and Rs106.90.
Against euro, the rupee continued to swing both ways in narrow ranges last week.
The week ended in negative as the rupee turned minus against the euro, trading at Rs126.10 and Rs127.10 in the last trading session.
Published in Dawn, The Business and Finance Weekly, August 7th, 2017