The local market observed mixed sentiments this week as rupee remained under pressure due to the political situation prevailing since the historic judgment of the Supreme Court on CJ reference and the former Prime Minister Case.

Falling trend was observed on the interbank market on the opening day of the week. Dollar supply was tight as buyers were active in purchasing US currency to meet the near-term demand.

The rupee touched the new low at Rs60.80 and Rs60.82 after shedding 20 paisa against the dollar pressurised by strong demand by the importers on September 3. It had closed last week at Rs60.60 and Rs60 62. On September 4, however, the rupee managed to show a turnaround giving up its overnight weakness after dollar supply improved. It recovered five paisa, changing hands versus the dollar at Rs60.75 and Rs60.77.

The rupee continued to display its strength over the dollar on September 5, as it extended its overnight firmness and posted fresh gain of eight paisa in relation to dollar to trade at Rs60.67 and Rs60.69 on further improvement in supplies of American currency in the local market.

The rupee continued to show its strength over the dollar for the third consecutive day on September 6, as dollar inflows helped the by gaining 10 paisa more. The dollar was at Rs60.57 and Rs60.59 at close of the day. The rupee recovered 23 paisa against the dollar in three days.

Firm trend prevailed in the interbank market on September 7, as the rupee/ dollar parity held its overnight levels despite the strong demand by the importers to meet the payment requirements. The rupee traded unchanged at Rs60.57 and Rs60.59 against the dollar. During the week in review, the rupee in the inter bank market recovered only three paisa against the American currency on cumulative basis.

In the open market, the rupee maintained its overnight levels against dollar and traded unchanged on the opening day of the week in review at Rs60.90 and at

Rs60.95. The rupee, however, lost five paisa against dollar and traded at Rs 60.95 and Rs61.00 on the second trading day of the week. The rupee further extended its slide against dollar on the third day, when it lost five paisa, changing hands at 61.00 and Rs61.05 .

On the fourth day of the week in review, the rupee managed to stage slight recovery versus the dollar, as it gained five paisa to trade at Rs60.95 and Rs61.00 on September 6. Rising trend in the open market rupee/dollar parity persisted for the second consecutive day on September 7. Despite higher dollar demand during the day the rupee managed to recover ten paisa against the dollar on the fifth day to trade at Rs60.85 and Rs60.90. This week, the rupee in the open market recovered five paisa versus the dollar on cumulative basis.

Versus the European single common currency, the rupee lost 13 paisa on the opening day of the week, when it traded at Rs82.75 and Rs82.85, against previous week close of Rs82.62 and Rs82.72. It, however, managed to recover from its overnight weakness on the second trading day of the week, as it managed to gain 12 paisa, changing hands at Rs82.63 and Rs82.75 against euro on September 4.

On September 5, the rupee further picked up 16 paisa against the euro and traded at Rs82.47 and Rs82.57. Unable to hold ground further, the rupee registered a sharp fall against the euro on September 6, when it lost 30 paisa and traded at Rs82.77 and Rs82.87. On the following day, the rupee further extended its losses versus the euro, shedding three paisa to trade at Rs82.80 and Rs82.90 on September 7. During the entire week the rupee, the rupee registered 18 paisa loss against the European single common currency.

On the international front, US markets were closed on September 6, the US dollar fell to a one-month low as rising mortgage delinquency rates and an ongoing liquidity squeeze stoked fear of slower economic growth ahead of the monthly US employment report. The euro got a boost after the European Central Bank left interest rates unchanged at four per cent but said inflation remains a concern, suggesting rate rises may resume in the future. The US dollar index, which measures the greenback against a basket of currencies, touched a one-month low of 80.364 and last traded at 80.456.

However, the dollar edged up 0.1 per cent to 115.34 yen. The euro gained 0.3 per cent to $1.3689 after ECB President said that the bank was continuing to monitor inflation closely. Sterling fell from an earlier 4-week high versus a basket of currencies after the Bank of England broke with tradition and issued a statement despite holding interest rates at 5.75 per cent as expected. It was flat on the day at $2.0189, having retreated from an earlier 4-week high of $2.0263.

At the close of the week on September 7, the dollar slid to a 15-year low against major currencies as data showed US payrolls fell last month for the first time in four years, raising recession fears and pressure for the Federal Reserve to cut interest rates. Traders dumped the dollar after the government said the US economy shed 4,000 net jobs last month, the first contraction in employment since August 2003. It also revised lower estimated job gains for June and July.