Mixed sentiments were witnessed in this week in the local currency market, where the rupee/dollar parity moved both ways during the week in review.

In the inter bank market, the rupee held its weekend levels against dollar on the week's opening day, changing hands at Rs60.75 and Rs60.76 on May 21. It held its present levels despite the higher demand for dollars. Balanced demand and supply of dollars helped the rupee to maintain its overnight levels on May 22. As a result firmness prevailed in the interbank market while the rupee did not show any change and traded versus the dollar at Rs.60.75 and Rs.60.76 for the second day in a row.

On May 23, significant rise was seen in dollar demand but high inflows kept the rupee firm. The rupee posted one paisa gains versus dollar, trading at Rs60.74 and Rs60.75. Supply of dollars was strong, which released some pressure on the rupee and restricted it from moving down the American currency on May 24. Consequently, the rupee held its overnight levels and traded unchanged at Rs60.74 and Rs60.75 against the dollar.

The rupee managed to hold its overnight levels trading at Rs60.73 and Rs60.75 against the dollar on May 25. Throughout the week in review, the rupee in the inter bank market managed to show a firm trend. Compared to previous week close, it however, gained two paisa versus the dollar this week.

In the open market, the rupee opened the week on a negative note and shed five paisa to trade at Rs60.80 and Rs60.90 on high demand for dollars by the corporate sector on May 21. The rupee had closed last week at Rs60.75 and Rs60.85 against the dollar. On May 22, the rupee managed to hold its overnight levels against the dollar on the buying counter, while picking up five paisa on the selling counter to trade at Rs60.80 and Rs60.85.

On May 23, the rupee firmly held its overnight levels against the dollar for buying but gave up five paisa for selling, changing hand versus the US currency at Rs60.80 and Rs60.90. Despite the higher demand for dollars by the corporate sector on May 24, the rupee managed to hold its overnight levels and traded against the dollar at Rs60.80 and Rs60.90.

Rising demand for dollars by the corporate sector pushed the open market rate higher on May 25. The rupee shed five paisa and traded at Rs60.85 and Rs60.95 against the dollar. During the week in review, the rupee in the open market lost ten paisa over its previous week's levels, amid fluctuations.

Versus the European single common currency, the rupee in the local currency market lost 10 paisa on the opening day of the week in review, changing hands at Rs81.90 and Rs82.00 on May 21, after having closed last week at Rs81.80 and Rs81.90. But on the following day, the rupee displayed firmness over the euro as it managed to recover 26 paisa to trade at Rs81.64 and Rs81.74 on May 22.On May 23, the rupee again came under pressure versus the euro, as it shed six paisa, changing hands at Rs81.70 and Rs81.80.

The rupee, however, recovered four paisa on May 24, and traded Rs81.66 and Rs81.76 against the European common currency. The rupee extended its overnight gains versus euro and gained 16 paisa against the euro on May 25 to trade at Rs81.50 and Rs81.60. This week, the rupee showed a firm trend versus the euro gaining 30 paisa over its previous week close levels, amid wide fluctuations.

In the international financial market, the dollar rose to five-week highs against the euro and three-month peaks versus the yen on May 21, as investors further trimmed bearish bets on the greenback amid a growing view the Federal Reserve will not cut interest rates anytime soon. Surprisingly strong US data last week on housing starts, regional manufacturing, jobless claims and consumer confidence have helped the dollar rebound more than two cents from a record low against the euro hit last month.

In New York, the euro was down 0.3 per cent on the day at $1.3466, nearly 2 percent below a record peak hit last month. It fell as far as $1.3436, the lowest since early April. The dollar was up 0.3 per cent at 121.42 yen, after rising as high as 121.63. The pound headed lower while the implied chances of higher UK interest rates rose. It pound was down 0.3 per cent against the dollar at $1.9687, having traded as low as $1.9676.

On May 22, the dollar traded near six-week highs against the euro and a three-month peak against the yen as traders further trimmed expectations of a Federal Reserve interest rate cut this year. The US dollar sell-off had been pretty strong and people are stepping back, and there hasn't been any fresh reason to go long euro. In late trading, the euro was 0.1 per cent lower at $1.3449, well below a record peak above $1.3680 seen last month.

In other currency pairs, the dollar slipped against the Swiss franc to 1.2291 francs, down around 0.1 per cent on the day. The euro, which rose to its highest since August 1998 against the franc on may 21, tumbled to an intraday low of 1.6534, before trading back up to 1.6541. The euro has fallen more than two cents from its record high against the greenback as speculators reduced bets on a further strengthening in the euro zone currency.

The dollar was slightly up on the day at 121.55 yen, within sight of a three-month high of 121.63 hit a day earlier. Sterling It was up 0.15 per cent at $1.9738, recovering from previous day's six-week low of $1.9676. Recent data pointing to slowing house price inflation has made investors more cautious about pushing sterling higher, keeping it below the 26-year peaks above $2 hit in April.

On May 23, the dollar fell after minutes from a Bank of England policy meeting and strong data on euro zone industrial orders suggested interest rates in Europe could rise more than previously thought. The pound surged against the dollar after the BoE minutes showed that, contrary to expectations. The central bank's decision to raise rates this month was unanimous, and some members even had considered a half percentage point rise.

The euro was trading at $1.3458, up 0.1 per cent but off an earlier session high of $1.3502. The dollar was just 0.1 per cent firmer against the yen at 121.65 yen but the Japanese currency took a beating against the euro, sterling and Australian dollar. Sterling was up nearly 0.6 per cent at $1.9857, having rallied more than one cent after the release of the minutes.

On May 24, the greenback surged to a one-month high against the euro and pared losses against the yen after the report, which was part of a series of data in recent weeks reflecting a recovery in US economic growth. The euro has fallen more than 2 cents from a record high hit last month although some analysts are skeptical it has much further room to decline against the dollar

In late trading, the euro traded down 0.3 per cent at $1.3422, after touching $1.3415, the lowest since April 11. The dollar's 1.19 per cent rise in May against a basket of major currencies was the biggest monthly increase since February 2006. Against the yen, the dollar was down about 0.2 per cent at 121.39 yen, short of a three-month peak of 121.88 hit in the previous session. The pound fell 0.1 per cent against the dollar to $1.9844.

At the close of the week on May 25, the yen jumped pulling away from a three-month low against the dollar struck earlier in the week, as investors reversed short positions in the Japanese currency amid a drop in regional stock markets. Market players have widely borrowed the low-yielding yen to fund purchases of higher-yielding currencies and assets in carry trades, helping lift sterling to a 15-year peak against the yen and the euro to an all-time high this week

The dollar hit a six-week peak against the euro. The euro was buying $1.3436, within sight of an earlier 6-week low of $1.3413. The dollar fell 0.2 per cent to 121.15 yen recovering from 120.85 yen hit earlier in the session but keeping its distance from a three-month peak of 121.88 yen. The pound retreated however from earlier five-week highs against a broadly stronger euro after softer than expected US housing data dented wider dollar sentiment. It was steady on the day against the dollar at $1.9845.