THE rupee opened the week on a firm note as it held its weekend's value versus the dollar in the interbank market and traded at Rs60.72 and Rs60.73, unchanged from previous week close. Dollar supply was enough to meet the corporate demand on March 12. The rupee managed to recover one paisa against the dollar on the second day of the week, changing hands at Rs60.71 and Rs60.72, as supply of the dollars improved further.

Modest recovery was seen in the rupee/dollar parity on the third trading day. The rupee picked up two paisa on improved dollar supply and traded at Rs60.69 and Rs60.71 against the dollar on March 14. On the fourth day, however, the trend reversed as the rupee shed two paisa on the buying counter, while it slipped by one paisa on the selling counter to trade at Rs60.71 and at Rs60.72 against the dollar.

On the fifth trading day of the week in review, the rupee picked up two paisa versus dollar in the interbank market on further improvement in dollar supply, amid rising demand by the corporate sector. The dollar traded at Rs.6068 and Rs60.69 on March 16. In the entire week, the rupee managed to gain four paisa on the buying counter and five paisa on the selling counter against the dollar in the inter bank market.

In the open market, firmness prevailed on March 12, as the rupee did not show any change against the dollar and traded at its last week close levels of Rs60.70 and Rs60.75. On March 13, the rupee maintained a stable trend on the buying counter remaining unchanged against the dollar at Rs60.70 but it lost five paisa, on the selling counter and traded at Rs60.80.

On March 14, the rupee shed two paisa versus the dollar, changing hands at Rs60.72 and Rs60.82. However, on March 15, the rupee rose by two paisa and traded at Rs60.70 and Rs60.80 against the dollar. On March 16, the rupee traded unchanged at its overnight levels of Rs60.70 and Rs60.80. During this week, the rupee in the open market managed to hold its previous week’s buying rate against the dollar, while shedding five paisa on the selling counter.

Versus the European single common currency, the rupee extended its ground against the euro, picking up six paisa on the first trading day, when it was seen changing hands at Rs79.41 and Rs79.50 against previous weekend’s Rs79.47 and Rs79.57 after the dollar's persistent gains in the world market. But on the second trading day, the rupee was sharply down against the euro, slipping 54paisa to trade at Rs79.85 and Rs79.95.

The rupee, however, gained three paisa on the third trading day and traded at Rs79.82 and Rs79.92. On the fourth trading day, the rupee slipped sharply, shedding 28paisa to trade at Rs80.10 and Rs80.20, as the euro managed to gain sharply against the dollar in the international market. On the fifth trading day, the rupee further lost 25paisa against the euro and traded at Rs.80.45 and Rs.80.55. This resulted in an overall weakening of the rupee versus the European single common currency this week by 98paisa, amid sharp fluctuations.

In the international financial market, the yen gained and the pound fell versus the dollar on the opening day of the week in review, as cautious investors continued to shun risk and trimmed exposures to currencies with high interest rates ahead of a slew of US data this week. The dollar, meanwhile, gave up its gains from last week close when solid US employment data revived carry trades.

The dollar fell to an intraday low of around 117.23 yen before paring losses to 117.64 yen, still down 0.5 per cent from last week close. Sterling was flat at $1.9325. The dollar dropped 0.9 per cent against the Swiss franc to 1.2238 francs. Against the dollar, the euro rose 0.6 per cent to $1.3191. Buying of the euros versus the dollar by global macro funds late in the session fuelled further gains in the currency pair, traders said. The euro, however, has remained within a trading range of roughly $1.33 to $1.2865.

On March 13, the yen soared across the board as worries about the US subprime mortgage sector pushed investors to further unwind trades funded by borrowing at low rates in the Japanese currency. The dollar was down 1.2 per cent against the yen at 116.25 yen in late trading. The yen's gains coincided with falls in the US stock market, as mounting losses in the subprime mortgage sector weighed down shares of companies exposed to the US housing market.

Against the Swiss franc, the dollar fell 0.6 percent to 1.2176 francs. The euro slid 1.2 versus the yen to 153.35 yen, moving further away from February's record high near 160. Sterling also dropped, falling 1.2 percent to 224.55 yen, while the New Zealand dollar, the currency with the highest interest rate in the developed world, plunged more than 2.4 per cent to 80.08. The Australian dollar also plummeted, down 1.7 per cent to 90.81 yen.

The report fueled a modest sell-off in the dollar. In New York, the euro was flat at $1.3194. Sterling fell against the yen extending heavy losses from the previous session as concerns about the US housing market continued to prompt waves of risk aversion, with investors backing away from carry trades. It had fallen 0.4 percent to 226.39 yen. It was down 0.1 percent at $1.9346 and steady versus the euro at 68.22 pence.

On March 14, the dollar rebounded against the yen in choppy trading after US stocks recovered, reversing earlier declines. The greenback has tracked moves in equities, as investors sold riskier assets in the last two weeks amid problems in the US subprime mortgage market. That helped push US blue chip stocks to their lowest since November while driving US Treasury prices higher.

In New York, the dollar rose 0.8 percent against the yen to 117.03. The euro came off highs against the dollar, trading at $1.3224, still up 0.2 per cent, though, on the day. It reached as high as $1.3246 around midday as US equities weakened. Sterling erased overnight losses and gained 0.4 perm cent to $1.9357. Against the yen, the euro rose one per cent to 154.80.

The yen has gained about for per cent in the last two weeks as a rise in risk aversion sent market participants scurrying for the exits on carry trades, in which investors borrow in a low-interest-rate currency to buy a higher-yielding unit and profit from the spread. Sterling was 0.3 per cent higher on the day at $1.9338, having bounced from a session low of $1.9214. On a trade weighted basis, sterling hit a 4-month low of 102.4 before recovering to 102.7. The euro was steady at 68.39 pence, retreating from an earlier 8-month peak of 68.67 pence.

On March 15, the dollar firmed against the yen underpinned by a modest rise in US stocks and an improvement in investors' appetite for risk. Economic data provided some evidence of weakness in the US economy, but producer price inflation reported for February was higher than expected, suggesting the Federal Reserve will not lower interest rates any time soon. As a result, interest rate differentials with the euro and the Japanese yen are not seen changing much.

The dollar was up about 0.50 per cent at around 117.61 yen. The euro was little changed at $1.3235. The dollar was flat against the Swiss franc at 1.2175 francs. Sterling steadied against the euro after hitting an eight-month low the previous day as investors trimmed exposure to carry trades investing in high-yielding currencies like the pound. It was unchanged on the day at $1.9350, and steady at 68.35 pence per euro.

At the close of the week on March 16, the dollar slid to three-month lows against the euro and the Swiss franc as a drop in Tokyo shares prompted market players to cut back on risky positions before a slew of US economic data later in the day. The euro climbed to $1.3290 against the dollar in late Tokyo trade, up 0.4 per cent on the day, after touching a three-month high around $1.3310.

Major currencies have slipped against the yen, hit by shifting tastes for risk as a rebound in equity markets earlier in the week gave way to yet more heavy selling of stocks on worries about the US economy, prompting investors to reverse carry trades and buy back the yen. The dollar rebounded to 117.10 yen after falling to around 116.82 yen earlier in the session, giving back gains made the previous day on a modest rise in US shares.

The US currency touched a three-month trough near 1.2080 Swiss francs following the Swiss National Bank's interest rate hike to 2.25 per cent a day earlier. Sterling rose to a two-week high against the dollar. It has been under pressure in recent sessions as jittery investors unwound risky carry trades where they borrowed in low-yielding currencies to invest in higher-return units like the pound. The pound was up half a percent at $1.9467, having risen earlier to $1.9504.