THE local currency market witnessed sentiments this week, with the rupee/dollar parity moving both ways in a narrow range. Comfortable dollar supply situation did not allow the rupee to fall sharply versus the American currency, amid persistent demand for dollar, particularly from the importers.

Against the European single common currency, the rupee, however, continued to suffer losses. However, the rupee managed to minimize its losses during the week.

Bearish sentiments were witnessed in the interbank market on the opening day of the week. The rupee lost four paisa, changing hands at Rs60.69 and Rs60.71 against the dollar on February 26, amid tight dollar supply due to closure of world financial markets and aggressive dollar buying by the importers. The dollar had closed last week at Rs60.65 and Rs60.67.

The rupee showed a stable trend against the dollar on the week’s second day of trading. The rupee traded unchanged at Rs60.69 and Rs60.71 on balanced demand and supply of dollar on February 27. Despite the higher demand for dollar, the rupee managed to hold its firmness versus the US currency on the third day of trading. It posted a fresh gain of two paisa and traded at Rs60.67 and Rs60.69 on February 28.

Increased demand for dollars by the corporate sector exerted downward pressure on the rupee on March 1. As a result, the rupee gave up its overnight firmness against the dollar on the fourth day of the week in review, shedding four paisa for buying and another two paisa for selling and traded at Rs60.70 at Rs60.71 against the dollar.

High demand for dollar to meet payment needs existed in the inter bank market on March 2. However, marginal change was witnessed in the rupee/dollar parity. The rupee lost one paisa against dollar, which traded at Rs60.71 and Rs60.72. During the week in review, the rupee lost six paisa against the dollar on the buying counter and five paisa on the selling counter.

In the open market, the week commenced on a positive note, as the rupee maintained its weekend surge against the dollar, gaining three paisa at Rs60.68 and Rs.60.78 on February 26, after closing last week at Rs.60.68 and Rs60.78.

On February 27, the rupee remained stable against the dollar and traded unchanged at its overnight levels of Rs60.68 and Rs60.78.

However, on February 28, the rupee managed to picked up five paisa against the dollar on the buying counter, while it maintained its overnight level on the selling counter. The dollar traded at Rs60.63 and Rs60.78 during the day. On March 1, the rupee improved further against the dollar as it posted fresh gains of two paisa at the buying counter and another three paisa on the selling counter, changing hands at Rs60.65 and Rs60.75.

The dollar recovered its lost ground against major currencies on March 2, as the global stock markets were still striving to come out of the crisis. However, the rupee firmly held its overnight levels against dollar at Rs60.65 and Rs60.75 in the open market. It shed only three paisa against the dollar over the previous weekend levels.

The European single common currency did not show significant change versus the rupee, despite touching the seven-week peak versus the greenback on the first day of trading. The rupee was almost firm as it posted a marginal gain of one paisa against the euro, which traded at Rs79.45 and Rs79.55 on February 26, against previous week close of Rs79.46 and Rs79.56.

The rupee failed to hold ground versus the euro on the second trading day and lost 10 paisa to trade at Rs79.55 and Rs79.65 on February 27. The rupee down trend versus the European single currency persisted on the second day in a row, losing 23 paisa more on February 28, when euro traded at Rs79.78 and Rs79.88.

The rupee extended its weakness versus euro for the third consecutive day on March 1 and shed eight paisa more to trade at Rs.79.85 and Rs.79.90. The euro came under heavy selling pressure and trimmed its gains, shedding 33 paisa against rupee changing hands at Rs79.52 and Rs79.62 on March 2, bringing cumulative gain of six paisa against the rupee this week.

In the world forex markets, the dollar slipped against the yen and the euro on the opening day of the week. The yen gained across the board after the dollar failed to break above a recent high last weekend, prompting some short-term market players to trim their bets on further weakness in the yen, traders said.

The dollar lost some support but trading volume was much lower than usual.

Based on the Reuters daily forex reports, the dollar declined 0.4 percent to 120.55 yen. It peaked at around 121.63 yen twice last week but failed to break above that level. However, the dollar's failure to break through some key levels last week helped the yen a bit. The euro rose 0.1 per cent to $1.3182 after rising to just short of $1.3200 earlier in the session, its highest since early January.

The dollar was down 0.2 percent against the Swiss franc at 1.2295 francs; earlier it traded at about 1.2288, its lowest level in almost two months. Sterling hit a 1-1/2 week high against the dollar after a strong British house prices survey. It had risen to the 1-1/2 week high of $1.9661 before erasing gains to $1.9622 to trade flat on the day.

On February 27, the yen surged more than two per cent against the dollar for its biggest jump in a year, as investors fled risky trades on fears of rising volatility in financial markets. A tumble in global stock prices, soft US economic data, and growing tensions with Iran jolted investors from complacency, sparking the sell-off in the dollar, which has benefited in past months from a steady decline in the yen.

In New York, the dollar traded at 118.04 yen. The euro at $1.3233, up 0.4 percent on the day, near a two-month high around $1.3260 hit earlier. Demand for the accelerated after a report showed an unexpectedly sharp drop in US durable goods orders in January, adding to speculation the Federal Reserve may cut interest rates later this year to prop up a slowing economy. The Swiss franc rose sharply and traded at 1.2170 francs per dollar. The pound was a touch firmer against the dollar at $1.9650.

On February 28, the dollar rebounded against the yen, shrugging off a series of lackluster data on the US economy, while the Japanese currency relinquished some of the sharp gains made in the previous session. Comments from Federal Reserve Chairman, who said it is "reasonable" to expect stronger growth later in the year, lent some support to the dollar.

The dollar was up 0.4 per cent at 118.39 yen, after having fallen to a 10-week low of 117.50 on February 27 - its biggest daily decline in 14 months. Despite this rebound, the dollar was still 1.9 per cent weaker against the yen for the month. The yen's gains on previous day came as investors scrambled to unwind carry trades built amid expectations of further weakness.

Meanwhile, the euro was down 0.1 percent at $1.3224, pulling away from a two-month high around $1.3260 hit previous day, but still ending the month up around 1.5 percent against the greenback. Sterling was steady on the day at $1.9608, having recovered from an earlier 6-day low of $1.9519. The euro was down 0.2 percent at 67.36 pence, off an earlier two-month high of 67.58 pence.

On March 1, the dollar rose against the euro for a second day, buoyed by a strong February reading on a key gauge of US manufacturing, while a global sell-off in stock markets helped drive the yen sharply higher. The dollar pared some of its losses against the yen, rebounding from 11-week lows.

The euro was trading at $1.3186, down 0.3 per cent on the day. The dollar fell 0.8 percent to 117.56 yen, recovering after a dip to 116.96, its lowest since mid-December. It has dived almost three per cent against the yen this week, on track for its worst weekly performance in around 14 months. The yen shot higher in early New York trade as a sharp fall in US stock prices at the open led some investors to continue buying back the Japanese currency, which they had borrowed to finance bets on risky assets. Against the dollar, sterling was down 0.2 per cent at $1.9599.

At the close of the week on March 2, the dollar edged up against the yen and euro even as market players stayed anxious over whether a global sell-off in stock markets this week has yet run its course. It climbed slightly to 117.63 yen after rising as high as 117.85 yen, pulling up from 11-week lows at 116.96 yen. The euro hovered near $1.3172 after sliding to $1.3155 during previous session. The pound also fell sharply against the dollar. It fell 0.74 percent to $1.9441 and hit a 2-1/2 month low of 67.86 pence.