BOTH demand and supply of dollar existed in the local currency market amid subdued trading this week. However, the week commenced on a negative note in the inter-bank market on October 3, when the rupee shed one paisa for buying at Rs59.70 and lost two paisa for selling at Rs59.72, against previous week’s Rs59.69 and Rs59.70.

Easy supply of dollar as a result of larger inflows of remittances and improved exporters’ selling restricted any sharp decline in rupee value.

The decline in rupee value persisted amid bearish sentiment on October 4, as the rupee shed additional three paisa for buying and two paisa for selling against the dollar which traded at Rs59.73 and Rs59.74. Major payment requirement pushed the rupee value down but the decline was limited due to easy supply of dollar from overseas Pakistanis.

Extended buying of dollar by different banks to meet the import bills payments was observed on October 5. The rupee, however, did not show sharp variations. The dollar remained unchanged at Rs59.72 and Rs59.74. On October 6, the inter-bank market rates were not issued as the banks were closed for Zakat deduction on first Ramazan.

The rupee, in the inter-bank market, managed to gain three paisa against the dollar on October 7, due to significant rise in the inflows. It traded at Rs59.69 and Rs59.71, remaining almost unchanged from its previous week close.

In the open market, the rupee was unchanged versus the dollar at Rs60.30 and Rs60.40 on October 3, amid modest trading. The rupee, however, managed to recover five paisa on October 4, trading at Rs60.25 and Rs60.35 versus the American currency. On October 5, the rupee extended further gains versus the dollar and appreciated by 10 paisa amid sufficient supply of the US currency.

On October 6, the rupee maintained firm posture, holding its overnight levels versus the dollar at Rs60.15 and Rs60.25. On October 7, the rupee gained five paisa versus the dollar which was seen changing hands at Rs60.10 and Rs60.20 in the open market. During the week, the rupee managed to gain 20 paisa against the dollar in the open market.

Against the European single common currency, the rupee recovered 40 paisa on the opening day of the week trading at Rs72.30 and Rs72.20 on declining trend of euro in the global market. The rupee had traded last week at Rs72.50 and Rs72.60 against the European single common currency. It maintained its firmness over the euro on the second day of the week in review, picking up 40 paisa to trade at Rs71.90 and Rs72.00 on falling demand in the world markets.

The rupee could not maintain its overnight level versus the euro on the third day of the week and lost 10 paisa to trade at Rs72.00 and Rs72.10. On the fourth day, the rupee again depreciated by 10 paisa against the euro changing hands at Rs72.10 and Rs72.20. Finally the rupee ended the week against the euro on a negative note on the fifth day of the week in review, trading at Rs72.50 and Rs72.60, down 40 paisa over its overnight levels. Over the previous week close, the rupee this week did not show any change versus the dollar.

In the international markets, the dollar jumped to 16-month high against the yen and a three-month peak versus the euro on expectations of more US interest rate rises and a disappointing survey of the corporate sentiment in Japan on the opening day of the week. In late trade on October 3, the dollar was up 0.6 per cent at 114.14 yen after climbing as high as 114.37 yen, it’s highest since May 2004. The euro was down nearly one per cent at $1.1912. It earlier touched a three-month low of $1.1903.

The dollar also surged to a two-month high against the Swiss franc and sterling. The dollar last changed hands at 1.3020 Swiss francs, up 0.7 per cent, while sterling fell 0.5 per cent against the dollar to $1.7546. The dollar was already up broadly even before the ISM data, particularly against the yen, drawing support from a slightly softer-than-expected Tankan report.

On October 4, the dollar was little changed in thin trading, with market sentiment on the currency still decidedly bullish, as investors focused on expectations for higher US interest rates.

In late trading, the dollar was up slightly against the yen at 114.22 yen, coming off 16-1/2-month highs at 114.42. Late in New York, the euro traded nearly flat at $1.1918 after it failed to break support near $1.1900. Against sterling, the dollar touched a fresh two-month high before surrendering gains. Sterling rose 0.3 per cent to $1.7595 in late trading. The greenback was nearly unchanged against the Swiss franc at 1.3014 francs.

On October 5, the dollar retreated, reversing some of this week’s gains in partly technical trading, after the US data showed growth in the services sector slowed sharply last month. The Institute for Supply Management’s (ISM) services index fell to 53.3 in September from 65.0 in August, well short of Wall Street’s median forecast for a drop to 61.0. A number above 50 indicates growth in the sector.

Over the last few sessions, markets have tried to push the euro below $1.19, but it hasn’t gone below that level. So markets are squaring up.

In late trading in New York, the euro stood at $1.1970, up 0.4 per cent from October 4 levels and above a three-month low around $1.1900 set earlier in the week. Against the Japanese yen, the dollar was down 0.3 per cent at 113.89 yen. Sterling rose 0.2 per cent against the dollar to $1.7625 while the dollar fell 0.6 per cent against the Swiss franc to 1.2930 francs.

On October 6, the dollar tumbled, posting its biggest one-day drop against the euro in over three years in technically-driven trading, as investors who had earlier sold the euro zone currency got squeezed after it failed to go below a key level.

In late New York trade, the euro traded at $1.2179, up 1.7 per cent from a day earlier, topping a three-month low earlier this week around $1.1900. The dollar fell 1.7 per cent against the Swiss franc to 1.2704 francs, while sterling rose 0.9 per cent to $1.7783. Against the yen, the dollar was down 0.5 per cent at 113.23 yen, although gains in the Japanese currency were kept in check by a sharp fall in Tokyo stock prices overnight.

At the close of the week on October 7, the dollar hovered near a two-week low against the euro after the European Central Bank voiced concerns about inflation and as traders hesitated to bid up the dollar on worries about upcoming US employment data. The dollar posted its biggest one-day loss versus the euro in over three years as investors sold the currency partly on the view its recent rally on expectations for higher US interest rates had been overdone.