THE rupee entered 2018 in the minus and kept going down in the first week, under pressure from continued political uncertainty and the weakening of some macro-economic indicators.
The first trading session (Monday) on the interbank market remain suspended on account of bank holiday on Jan 1.
On Tuesday, the rupee fell to Rs110.51 and Rs110.52 on buying and selling counters, as it remained under pressure owing to a surge in dollar demand from state-owned oil companies as well as importers to settle oil-payments.
The rupee further weakened on the selling counter on Wednesday, closing at Rs110.51 and Rs110.53.
Ended the week at Rs110.53 and Rs110.54 on buying and selling counters
On Thursday, the rupee dropped two paisa on the buying counter and one paisa on the selling counter amid sluggish demand for the greenback, trading at historic lows of Rs110.53 and Rs110.54.
Instrumental measures by commercial banks resisted a bigger fall in the rupee’s value. However, trading remained normal as the market participants didn’t react to the reports of US suspending military aid to Pakistan.
The rupee ended the week flat at Rs110.53 and Rs110.54 against the dollar as the parity did not show any change in its overnight rate in the last trading session.
Against the dollar, the rupee on the interbank market suffered an 11-paisa loss on the buying counter and a nine-paisa loss on the selling counter during the week in review.
In the open market, the rupee drifted lower against the dollar by 10 paisa on Monday, trading at Rs110.60 and Rs110.90 against the previous week’s close at Rs110.50 and Rs110.80.
It fell 40 paisa to historic lows on Tuesday after the State Bank decided to reduce the import of dollars against the export of permissible foreign currencies from 100pc to 35pc in a month to ensure liquidity in the foreign exchange market. Consequently, the dollar surged to a fresh peak of Rs111.00 and Rs111.30.
On Wednesday, the dollar continued its upward march and climbed to historic highs against the rupee at Rs111.20 and Rs111.50 after the rupee posted a 20-paisa loss. The rupee, however, managed to rise by 10 paisa on Thursday which pushed the dollar slightly lower at Rs111.10 and Rs111.40.
But on Friday, the dollar regained strength over the rupee after the rupee shed 20 paisa and slipped to Rs111.30 and Rs111.60, attaining fresh lows at the close of the week.
During the week, the dollar in the open market gained 90 paisa against the rupee in four sessions, while losing 10 paisa in one session. The rupee thus suffered an 80-paisa loss against the dollar on a week-on-week basis.
Published in Dawn, The Business and Finance Weekly, January 8th,2018