THE dollar rose to historic highs, exerting downward pressure on the rupee that fuelled panic dollar-buying in the interbank and open market in the past two weeks.
The week commenced in negative mode as the rupee inched down by one paisa on the buying counter and shed another two paisa on the selling counter on Monday to trade against the dollar at Rs110.54 and Rs110.56.
On Tuesday, the rupee staged a modest recovery, posting gains of two paisa on the buying counter and one paisa on the selling counter. The dollar was seen changing hands at Rs110.52 and Rs110.55.
The rupee further lost one paisa on the buying counter but traded flat on the selling counter change on Wednesday as the rupee remained changing hands at Rs110.53 and Rs110.55. The parity continued to trade unchanged for the second straight day at Rs110.53 and Rs110.55 on Thursday on dull dollar demand.
The rupee almost stayed firm on Friday as it drifted lower by one paisa on the buying counter but retained its overnight rate on the selling counter, trading at Rs110.54 and Rs110.55.
The local currency remained under pressure in the open market amid speculative dollar buying
On a week-on-week basis, the dollar on the interbank market gained one paisa during the previous week.
In the open market, however, the rupee remained under pressure amid speculative dollar buying due to short supply. At one stage, the dollar crossed Rs113 barrier against the rupee, touching Rs113.50 in an intra-day trade before settling at Rs112.30 and Rs112.50 on Monday.
The rupee still shed 30 paisa on the buying counter and 20 paisa on the selling counter.
On Tuesday, the rupee managed to stage a sharp recovery after the State Bank of Pakistan (SBP) reversed its decision, allowing dealers to import 100pc cash dollars against the export of other foreign currencies.
The rupee posted a 30-paisa gain on the buying counter and a 40-paisa gain on the selling counter with dollar changing hands at Rs112.00 and Rs112.10.
Extending its firmness, the rupee further picked up 30 paisa on the buying counter while retaining its overnight rate on the selling counter on Wednesday and traded against the dollar at Rs111.70 and Rs112.10.
The parity remained unchanged on Thursday and continued to trade flat at Rs111.70 and Rs112.10 in the absence of dollar demand.
The week ended on a negative note as a slight pickup in dollar demand enabled the dollar to rise to Rs111.80 and Rs112.20 after the rupee suffered a 10-paisa loss on Friday.
During the week, the dollar in the open market lost 20 paisa on the buying counter and 10 paisa on the selling counter against the rupee.
Against the euro, the rupee moved both ways trading in tight range last week.
The euro climbed to Rs135.00 and Rs137.00 at the close of the week.
Published in Dawn, The Business and Finance Weekly, January 15th,2018