A divergent trend was witnessed on the money market last week. The currency traded in the narrow range of 124.22/25 during the entire week. However, the rupee was still under pressure against the dollar and the euro. Analysts are of the view that the expectations for bilateral and multilateral inflows in coming weeks could boost the rupee in coming months.

On the interbank market, the rupee moved both ways, remaining under pressure against the dollar throughout last week. Trading in a narrow range, the rupee inched down by one paisa on the buying counter but traded flat on the selling counter, retaining overnight rate unchanged in the first trading session when the dollar was seen changing hands at Rs124.25 and Rs124.26 against the previous week close at Rs124.24 and Rs124.26.

Due to insignificant dollar demand in the second trading session, the rupee-dollar parity did not show any change and closed the session flat at Rs124.25 and Rs124.26 for the second day in a row. The rupee rebounded sharply against the dollar in the third trading session, reacting sharply over the reports that there is a plan to issue overseas Pakistanis saving certificates valuing $1 billion next week. The news had a positive impact and boosted investors’ confidence. The rupee gained seven paisa on the buying counter and six paisa on the selling counter while the dollar slipped to trade at Rs124.18 and Rs124.20 at the close of the session.

The decision by the central bank to provide funds for oil payments kept the rupee firm against the dollar

However, the rupee’s overnight firmness against the dollar proved short-lived after the dollar managed to bounce back and posted six paisa gain on the buying counter and five paisa gain on the selling counter in the fourth trading session, which drifted the rupee lower at Rs124.24 and Rs124.25. The rupee closed the week flat against the dollar as it did not show any change in the last trading session as the market participants showed lack of interest due to soft dollar demand. The SBP decision to provide funds for oil payments kept the rupee firm against the dollar. The dollar traded at Rs124.24 and Rs124.25 for the second straight day.

During the week, the rupee on the buying counter lost seven paisa in two sessions but gained by the same amount in one session while trading flat in two sessions. On the selling counter, the rupee gained six paisa in one session and at the same time lost five paisa in one session while trading flat in three sessions.

Published in Dawn, The Business and Finance Weekly, September 3rd, 2018