The rupee was seen under pressure versus the dollar this week in both currency markets. A persistent demand for dollars due to heavy month-end payments did not allow rupee to recover its lost grounds in the interbank market on March 22.

The week commenced with the dollar changing hands at Rs57.50 and Rs57.52. Market was closed on March 23, on account of the Pakistan Day. When trading resumed on March 24, the rupee managed to recover two paisas in terms of dollar and traded at Rs57.48 and Rs57.50.

On March 25, the rupee further gained two paisas over its overnight level with the dollar trading at Rs57.47 and Rs57.48. The rupee on March 26, lost four paisas against the dollar in the inter bank market for buying and selling at Rs57.51 and Rs57.52 on corporate demand.

The local currency failed to sustain its firmness due to the banks' in need of dollars for payments. In the world currency markets, the dollar was lower versus yen on positive economic outlook in Japan.

In kerb trading, the increased demand for dollars on March 22, forced the rupee to shed two paisas versus the dollar over the previous weekend level. The dollar was seen changing hands at Rs57.75 and Rs57.80 during the day. Banks were the leading buyers to meet their near-term needs.

On March 24, slight improvement in the flow of dollars helped the rupee to recover two paisas in open market, where the dollar traded at Rs57.73 and Rs57.78, as banks took some interest in dollar-buying. On March 25, the rupee did not show any major change versus the dollar with one paisa gain to trade at Rs57.72 and Rs57.77.

The rupee firmly held its prevailing levels in terms of the dollar in the open market for buying and selling at Rs57.72 and Rs57.77. Against the European single common currency the rupee fluctuated slightly this week.

The euro traded at Rs70.90 and Rs71.20, on the week's opening day, showing 8 paisas loss in the rupee value. When trading resumed on March 24, after a day break, the local currency was stuck up in a tight range versus the euro, showing no variation against its overnight level of Rs70.90 and Rs71.20.

On March 25, the single European currency, however, came under pressure in the local markets after shedding its lustre in the world markets, and euro declined sharply following the speculations that the European Central Bank might cut interest rate in the coming days.

The rupee posted a fresh gain of 80 paisas against the euro trading at Rs70.10 and Rs70.40. In the international market, the dollar fell broadly on March 22, hit by a combination of heightened security concerns and equity market weakness amid an absence of economic news.

While the US currency weakened against most major currencies, it held a slight gain versus the yen after fresh warnings about the intervention from the Japanese authorities.

The euro was up 0.4 per cent against the dollar at $1.2325, while against the safe-haven Swiss franc, the dollar was down about 0.8 per cent at 1.2596 francs.

The Australian dollar rose 0.6 per cent against the greenback to the US $0.7530. The US dollar was 0.15 per cent weaker against the Canadian unit. The euro rose to 132.60 yen, 2 yen above the last week's seven-week high of 130.73 yen, before drifting down to 131.70 yen, up 0.5 per cent. The dollar held at 106.73 yen, up slightly on the day on fear of intervention.

Sterling hit a two-week high against the dollar and gained one per cent versus the yen as the greenback and the Japanese currency fell victim to global security concerns.

The pound also hit a two-week high on the euro, drawing strength from expectations of higher interest rates in Britain. It had risen to 66.85 pence, after closing at 66.91 last weekend. Against the dollar it had risen to $1.8471, compared with $1.8310 in late New York of previous week close. The pound gained two yen to 197.88.

On March 23, the dollar traded in a tight range with the investors looking for direction as global security concerns weighed on the market. The US currency had gained modestly in early trading, recovering somewhat from the previous session's fall on concerns over the repercussions of Israel's killing the spiritual leader of Hamas.

But in late New York, the dollar was range-bound amid a lack of news to move it one way or another. The euro traded at $1.2320 down 0.1 per cent against the dollar from previous week's New York close, according to the Reuters data. The euro had been as high as $1.2369 and as low as $1.2266.

The dollar rose against the Swiss franc to trade at 1.2595 francs. Sterling was steady at $1.8477 having traded as low as $1.8407. Investors remained wary about possible yen-selling intervention by Japan, keeping the dollar near the unchanged mark on the day at 106.75 yen.

Sterling firmed to fresh three-week highs against the euro in London trading, as focus remained on a hawkish UK interest rate outlook, though it struggled to build on early two-week highs against the dollar. The pound traded at $1.8488 against the dollar, off its earlier two-week high of $1.8505, but was up around 0.3 pence on the session at 66.50 per euro.

On March 24, the euro spiralled lower on Wednesday after senior European Central Bank officials made comments that raised investor speculation the central bank could cut rates, which would weaken the euro.

The euro's sell-off accelerated in New York trade - characterized by traders and analysts as thin in volume and prone to exaggeration - after it broke out of its well-worn ranges against the dollar between $1.2150 and $1.2450. In late trade, the euro hovered near $1.2125 down 1.65 per cent.

The euro's general weakness helped push the dollar up as high as 1.2788 Swiss francs, a rise of more than 1.5 per cent. Sterling fell to $1.8224 off 1.5 per cent. The dollar fell briefly versus the Swiss franc after the France's state-run SNCF railway found a bomb half-buried on the main line between Paris and Switzerland.

The euro fell more than 2 per cent against the yen to 128.68 yen while the dollar fell as low as 106.06 yen off roughly 0.50 per cent.

Sterling plummeted one per cent against the dollar, caught in a wave of broad losses in the European currencies on increasing speculation over a euro zone rate cut.

It fell to two-day lows of $1.8299, more than two cents below two-week highs set earlier. Sterling's break of a key support level at $1.84 cleared the way for sharper losses. But it hit three-week highs against the euro of 66.46 pence on the UK's firmer rate outlook.

On March 25, Sterling fell to a new one-week low against the dollar and lost one per cent on the day versus the euro after the Bank of England Governor pointed to the risk on the UK growth from a strong pound. Sterling had fallen as low as $1.7993, shedding more than one per cent from late New York levels after spiralling down all the way from $1.8539 on Thursday. It trimmed losses to $1.8044.

The dollar ended slightly weaker on March 25 as investors purchased euros and sold the US unit after the euro zone currency suffered several days of set banks. The market brushed aside earlier modest dollar strength after a sharp upward revision in the Federal Reserve's favoured measure of inflation for the fourth quarter of last year.

The euro was most steady at $1.2128 after touching the $ 1.22 session high. The dollar traded around 106.12 yen above the five week nadir of 105.78 yen reached earlier in the session.

The dollar was holding steady against major currencies after skidding to a five-week low against the yen in early trade after further positive data on the Japanese economy. The yen drove up to 105.6 per dollar, a level not since February 18, before easing back to the 106 level on what traders said was dollar buying intervention by the Japanese authorities around the 105.70 level.