The rupee has been able to sustain its present levels with the support of the State Bank of Pakistan (SBP) dollars selling to the banks for oil payments. This week, the rupee/dollar parity remain traded in a narrow range in the inter-bank market.

The week opened on a positive note with the rupee remaining unchanged on its previous week's level at Rs59.48 and Rs59.50 on December 6 in the inter bank market. On December 7, the local currency gained strength on easy supply of dollars.

It maintained its firmness versus dollar changing hands at Rs59.45 and Rs59.50, after gaining three paisa for buying. Range-bound trading was seen on December 8, amid modest fluctuations.

The parity closed at Rs59.46 and Rs59.48. On October 9, the dollar supply remained tight, amid year-end buying. The rupee managed to hold its overnight levels at Rs59.48 and Rs59.50 against the dollar.

On December 10, the parity continued its downtrend on surging dollar demand in the inter bank market. The rupee shed only one paisa for buying and three paisa for selling, with the dollar trading at Rs59.49 and Rs59.53. In the week as a whole the rupee/dollar parity in the inter-bank market was almost stable, amid marginal fluctuations.

In the open market, the rupee recovered 10 paisa against the dollar on the week's opening day (December 6). After the dollar lost some ground versus the rupee it traded at Rs59.85 and Rs59.95. On the following day (December 7), the rupee held to its overnight levels for selling but shed 5 paisa for buying at Rs59.90 and Rs59.95 against the dollar.

Slight increase in demand for dollars pushed the local currency value down in the local market on December 8. The rupee shed 10 paisa against the dollar and traded at Rs60.00 and Rs60.05. The rupee extended its overnight fall versus the dollar on December 9, and shed another 10 paisa with the dollar changing hands at Rs60.08 and Rs60.15.

As demand for dollar persisted in the inter-bank market on December 10, the rupee further extended its decline against the dollar. It lost 2 paisa for buying and 10 paisa for selling to trade at Rs60.10 and Rs60.20. During the week, the dollar gained 15 paisa over the rupee in the open market.

The rupee has also lost significant ground versus the single European currency, which has crossed Rs80 barrier in the last one week. On December 6, euro extended its weekend gains versus rupee in the open market trading at Rs80.00 and Rs80.30.

It managed to hold its firmness on December 7, and extended further gains, as the rupee lost 10 paisa more to trade at Rs80.10 and Rs80.40 on persistent rise in the international markets.

The rupee, however, staged a sharp recovery on the following day as it managed to gain 70 paisa versus the euro on December 8, trading at Rs79.65 and Rs79.95. But the euro gave up its overnight weakness versus the rupee, on December 9, recovering 30 paisa at Rs79.95 and Rs80.25.

On December 10, the rupee again managed to recover 30 paisa versus the euro, which was seen changing hands at Rs79.65 and Rs79.95 at close. As a result the rupee was able to gain 20 paisa against the euro this week.

In the world markets, the dollar came out of the weak spell and gained modestly versus major currency units. On December 6, the dollar won a respite, cutting heavy losses suffered last week as traders took profits in other currencies.

However, dealers said the market's long-term view on the US currency remained firmly negative as foreign demand for dollars is still seen waning, underscoring the deep US trade and fiscal deficits.

After hitting a five-year low against the yen last week, the dollar on the week's opening day rose over one yen in value on lingering concerns over potential intervention by Japanese authorities to stem the US currency's decline.

The threat of dollar-buying intervention was especially potent since the greenback finished last weekend session near the psychologically important level of 102 yen.

Traders attributed the weakness in the yen to covering of short positions on the dollar after heavy selling of the US currency last week. In New York, the euro was down around 0.4 per cent, compared with prices in the prior late New York session, at $1.3403 after it reached a lifetime high at $1.3460 last week end.

The dollar also rose over one per cent to a session high of 103.38 yen. The euro leaped to its best level against the yen since March, around 138.70 yen. Both the euro and the dollar rose against the Swiss franc. The dollar gained one per cent on the day to 1.1410 Swiss francs, while the euro rose 0.50 per cent to 1.5295 francs. Sterling slipped 0.25 per cent to $1.9382.

On December 7, the dollar edged lower, although it rose against the Canadian dollar after Canada's central bank signalled its strong currency would eventually affect domestic demand and prevent rate hikes. The US currency had only a few weeks ago hit a 12-year low against the Canadian dollar, on a general downtrend triggered by US deficit concerns.

In New York, the euro had pared its gains but still was up around 0.2 per cent against the dollar at $1.3428. Sterling was up 0.35 per cent at $1.9456, having earlier pushed above $1.95 for a new 12-year high. The dollar lost 0.1 per cent against the Swiss franc to 1.1402 francs. Against the yen, the dollar fell 0.3 per cent to 102.87 yen.

On December 8, the dollar rebounded as investors focused on relative interest rates, which increasingly were expected to favour the dollar, and reversed some bets against the currency.

Early in the session, the US currency soared more than 2 per cent against the Australian dollar after the Reserve Bank of Australia opted to keep interest rates unchanged.

It rose more than one per cent against the Canadian dollar, adding to sharp gains on December 7, after the Bank of Canada also opted to keep rates flat. The dollar leaped against the euro to its best single-day rise in two months.

The euro was at $1.3335, down about 0.70 per cent from the previous day's level. Against the yen, the dollar jumped more than one per cent from the prior late New York session, to 104.05 yen. The dollar also rose against the Swiss franc, to 1.1492 francs.

Sterling fell sharply from this week's 12-year high versus the dollar, shedding three US cents as a broad wave of profit-taking on the dollar's recent downtrend swept through the market.

It was down one per cent on the day, trading at $1.9250, having dipped to $1.9187 in early European trade. This compared with 12-year high of around $1.9507 reached on December 7.

On December 9, the dollar rose modestly adding to a two days long rebound but traders resisted large bets, holding tightly to whatever profits they have this year. After being broadly higher earlier in the session, the US currency's quick reversal later that left it only a touch higher on the day revealed the fragility of what many traders see as a temporary dollar rebound in a long term downtrend.

In New York, the euro slipped 0.15 per cent compared with prices in the prior late session, to $1.3312. The Sterling was down 0.4 per cent at $ 1.9253. The dollar was flat at 1.1499 Swiss francs. Against the yen, the dollar rose 0.5 per cent to 104.62 yen, helped by news that machinery order in Japan fell more than expected.