THE local currency market witnessed another dull week due to lack of interest by participants throughout last week.
Leading currency dealers remained on the sidelines as political uncertainty persisted.
The State Bank of Pakistan (SBP) is strictly monitoring the currency market and providing sufficient foreign exchange for routine business which has prevented the rupee from falling sharply against the dollar.
At the same time a weak dollar on the international market also provided some support to the rupee.
The euro, on the other hand, has strengthened against the dollar in the overseas trade, hitting a 2½-year peak last week. As a result, the rupee remained under pressure against the euro throughout last week.
On the interbank market, sluggish trading activity was witnessed last week. When the market opened after a long weekend on account of Eid holidays, the market participants showed lack of interest due to dull demand.
In the week’s opening session, the rupee traded flat at Rs105.39 and Rs105.40, unchanged over the last closing level.
Euro gains Rs2.50 against the local currency during the last week
In the second trading session, the rupee continued to trade flat at Rs105.39 and Rs105.40 due to continued dollar demand in the absence of market triggers.
After trading unchanged for two straight days, the rupee-dollar parity showed minor changes in the third trading session. The rupee inched down against the dollar, posting one-paisa loss at Rs105.40 and Rs105.41 due to slight pickup in demand.
However, the parity did not show any change in its overnight rates in the last trading session and closed the week flat at Rs105.40 and Rs105.41.
During the week, the SBP continued to provide dollars to commercial banks for meeting importers’ payment needs, which prevented the rupee from falling against the dollar. On a week-on-week basis, the dollar on the interbank market posted one-paisa gain against the rupee during last week.
In the open market, trading remained dull in the absence of triggers last week. The volume of rupee transaction remained low due to sluggish dollar demand. The rupee-dollar parity traded in narrow range amid minor variations.
The rupee started the week on a stable note, trading unchanged against the dollar at Rs105.90 and Rs106.10 in the first trading session.
In the second trading session, the dollar traded slightly higher at Rs106.00 and Rs106.20.
The exchanged remained flat in the third trading session. Finally, the rupee closed the week at Rs105.80 and Rs106.00, hitting a five-month low amid dull dollar demand.
Against the euro, the rupee assumed a declining trend last week as the euro gained Rs2.50 on a week-on-week basis.
The rupee started the week in minus. In the first trading session, the rupee suffered a 75-paisa loss on the buying counter and 50-paisa on the selling counter to hit Rs124.75 and Rs126.00, respectively.
The rupee’s downslide against the euro persisted for the second straight day as it fell to Rs125.30 and Rs126.60 in the second trading session.
In the third session, the rupee shed another 50 paise on the buying counter and 70 paise on the selling counter, a cumulative loss of Rs1.80 in three days.
In the last trading session, the rupee lost 70 paise to close the week at Rs126.50 and Rs128.00 at a two-and-a-half-month low.
Published in Dawn, The Business and Finance Weekly, September 11th, 2017