In the inter-bank market, the rupee assumed a continuous falling trend this week on rising dollar demand from banks, amid slow business. Sufficient dollar supply during the week, however, restricted any steep fall in the rupee value against the dollar.

The rupee lost 10 paisa in the four days trading. It closed the week higher with the dollar trading at Rs60.20 and Rs60.22, after opening at Rs60.14 and Rs60.16. There was not much activity in the market during the week.

The rupee shed only 6 paisa during the week, after it recovered 4 paisa on the closing day and touched the week highest level at Rs60.24 and Rs60.25 on January 17. Against other major currencies, the rupee did not show any sharp change at the inter-bank forex counter. It continued to show strength over the British pound, euro, Canadian, Australian and Singapore dollars, Swiss francs, Swedish krona, Norwegian and Danish krones, Japanese yen and Saudi Riyal. However it lost further ground versus the Chinese yuan, Malaysian ringgit, New Zealand and Hong Kong dollars, Qatari riyal, Kuwaiti diner and the UAE dirham.

In kerb trading, however, the rupee displayed strength over the dollar. Release in tension over the borders had a positive impact on the rupee. After closing at Rs61.0 and Rs61.10 last week, the rupee gained 5 paisa on the opening day of the week under review and traded at Rs60.95 and Rs61.05 on January 14. In the following two days, it gained another 15 paisa due to matching demand and supply and traded at Rs60.80 and Rs60.90 in a dull market, showing 20 paisa gain in five days trading. Finally the week closed on January 18, with the rupee shedding 5 paisa. It traded at Rs60.85 and Rs60.95 against the dollar. Over the previous weekend close, the rupee was lower by 15 paisa.

Current trend in rupee/dollar parity is likely to persist in the inter-bank as well as kerb trading. No major development is expected in coming days. The gap between the interbank and open market rates has narrowed from 86 paisa last week to 65 paisa this week.

On international front on January 14, the dollar softened against the yen and euro in New York as investors fretted a US economic rebound may be slower and weaker than the market has anticipated. At the close of the US session, the dollar had reversed the day’s losses against the yen, finding support at the session’s low near 131.50 yen. It ended the day near 132 yen virtually unchanged from its previous US close.

The yen stemmed its declines last week as officials in Tokyo, facing grumbling from Asian trading partners worried a weak yen will hurt their competitiveness, appeared to stop talking the currency down. The yen posted mild gains earlier in the session, but relapsed in late trading as concerns over Japan’s economy returned to the fore. Dealers say the Japanese currency is merely consolidating after its slide to its lowest level in more than three years last week.

The British pound held firm in London as evidence of declining manufacturing activity was countered by speculation of merger and acquisition-related inflows. Helped by such factors, sterling pushed above $1.45 for the first time in almost two weeks. The British currency was steady against the euro at 61.58 pence.

On January 15, China’s vocal objections to an ever-weakening yen gave the Japanese currency a boost on January 15, rising by more than half a per cent against the dollar and euro. The dollar was pinned at the session’s low against the yen near 131 yen, off 0.70 per cent from its previous US close. The euro extended its losses against the yen, buying 116.80 yen, off a full per cent from its prior US closing price.

In Tokyo, the greenback fell through stops around 131.50 yen and hovered close to 131.00 - a full yen lower than late New York levels - where it met firm support. The dollar’s dip came despite morning comments from Japanese officials, who seemed to be resuming to the laissez-faire stance on the currency that has allowed it to fall around 10 per cent in the past two months. With market focus finely on dollar-yen, the euro was left firmly on the sidelines at $0.8940, flat with late New York. Against the yen, in followed the dollar down to 117.20 by late afternoon, compared with around 117.80 in early trade.

In London, sterling was flat against the euro but down a quarter of a percent against the dollar due to a small rebound in the greenback’s fortunes against the euro. Sterling has been locked in tight ranges against the dollar and the euro for several months. The pound was trading at 61.65 pence per euro and $1.4462.

On January 16, sterling was trapped in a tight range little changed from the New York close, with analysts saying the currency’s upside potential was severely constrained by continued talk of entry into the euro zone. The pound was trading at 61.32 pence per euro and at $1.4372. Sterling also reacted with indifference to the release of UK claimant count data showing a rise of 3,200 in December compared with forecasts for a rise of 7,400. The overall jobless rate was unchanged at 3.2 per cent in London trading.

The dollar put in a solid performance in Tokyo snapping a four-day losing streak against the yen and shouldering aside a suddenly exhausted euro. The dollar bounced to 131.35 yen from a 130.86 low on January 15, though it was unable to clear resistance around 131.65.

The yen has fallen about 12 per cent against the dollar since mid-September. The yen fared better against a downcast euro with the single currency shedding over two yen in 24 hours to slide beneath 116.00 yen.