The rupee/ dollar parity this week showed a mixed sentiment in the local currency market. The demand for dollar, though existed, sufficient supply of dollar during the week restricted any major fall in rupee value against the dollar.

There was lack of interest in dollar buying by the importers.

Corporate demand on the week's opening day forced the rupee to give up its previous weekend's firmness versus the dollar in the inter bank market, where it lost 6 paisa for buying and four paisa for selling to trade at Rs 59.48 and Rs59.50 on January 17. However, the trend reversed on the following day, as the release of home remittances' December figure helped the rupee to stage a sharp recovery versus the dollar.

Improved inflows of remittances from Saudi Arabia, US, United Arab Emirates and the GCC states during December 2004, led to a 3.8% increase in total remittances, which also improved dollar supply. Consequently the rupee picked up 7 paisa versus the dollar for buying and 5 paisa, for selling, changing hands at Rs59.41 and Rs59.45 on January 18.

On January 19, the rupee failed to maintain its firmness against the dollar in the inter bank market ahead of long weekend, shedding 3 paisa at Rs.59.43 and Rs.59.48. At this level, the rupee also lost 2 paisa during the week in review, when compared with the previous close. In the past 12 months, the rupee has lost Rs2.08 against the dollar in the inter bank market.

The local currency reaped gains against dollar in the kerb, as the greenback opened new week's trading on a slump note on January 17. A sharp rise was seen in the value of the rupee on improved supply of the American currency in the inter bank market. There was lack of buying interest amongst importers, amid improved dollar selling by exporters. The dollar changed hands at Rs.59.60 and Rs.59.70 after the rupee gained 20 paisa for buying and 15 paisa for selling in the open market.

On January 18, the rupee posted fresh gain of 5 paisa in terms of the dollar to trade at 59.55 and Rs.59.65, amid low demand and continued inflows of dollar. On January 19, the rupee in the open market gained 3 paisa for buying and 7 paisa for selling versus the dollar to trade at Rs.59.53 and Rs.59.58. Further at the close of the week, the rupee in the open market also gained 27 paisa over the previous week. However, in the past one year, the rupee lost Rs.2.06 versus the dollar.

Versus the Euro, the rupee gained 30 paisa, trading at Rs 77.75 and Rs 78.05, on slight improvement in the dollars' supply as a result of rising remittances, increased selling of export proceeds and lack of buying interest by the importers. On January 18, the euro's slide in the overseas markets, helped the local currency to recover its lost ground versus the European single common currency. The rupee gained 55 paisa and traded at Rs77.20 and Rs 77.50.

Finally the rupee ended the week on a negative note versus the Euro, shedding 30 paisa at Rs.77.50 and Rs. 77.80 on January 19.During the week, which was shortened by three days being public holiday on account of Eid-ul-Azha, the rupee managed to recover 55 paisa against the European common currency. Over the past 12 months ,however, the rupee depreciated by almost 6%.

On the international front, the dollar had another mixed week. Trading was quiet due to Martin Luther King Day holiday in the United States on the week's opening day. In Tokyo, the yen held near five-year highs versus the dollar on January 17, as European calls for more currency flexibility in Asia reinforced a view that the Japanese unit has lagged the euro's gains against the US currency.

The dollar was barely moved against most major rivals, but was gaining some support from strong US production weekend data, which helped keep it a considerable distance from its record low versus the euro hit at the end of last year. In the past three years, concerns about the financing of a growing US current account deficit have kept knocking down the dollar, particularly against the euro.

Concern that the euro has risen too much prompted European Central Bank (ECB) officials including President and chief economist Otmar Issing to issue fresh warnings last week that it was Asia's turn to bear a greater share of the burden of adjustments in foreign exchange rates. The dollar gained some support against the euro and other major currencies following strong US output data. US industrial production rose 0.8 percent in December, outstripping expectations for a gain of 0.4 percent.

The dollar has also gained some support in recent sessions from expectations that the Federal Reserve, which has already raised its benchmark funds rate five times since June, will continue its credit tightening campaign

The dollar was fetching about 102.15 yen slightly above late US levels but still not far off previous week's five-year low of 101.78. The euro was around $1.3113 about 0.1 percent up on the day but more than 4 percent off its peak of $1.3670 hit on December 30. Some analysts said the yen, which has gained 28 percent against the dollar in the past three years compared to a 47 percent rise in the value of the euro, had room to catch up.

In London, sterling hit an eight-week low against the dollar and lost ground versus the euro after fresh data from the housing market pointed to weakness and investors bet on downbeat economic figures later this week. The pound had fallen two thirds of a percent on the day to $1.8587, its weakest level since late November. Against the euro, sterling traded roughly 0.5 percent weaker from the previous day's close at 70.38 pence per euro.

The dollar bounced back from a five-year low against the yen and hit a two-month high against the euro on January 18, as market attention swung back to the prospect of rising US interest rates. A heavy schedule of speeches from Federal Reserve officials made investors reluctant to hold short dollar positions, particularly after minutes of the bank's latest policy meeting suggested interest rates may rise faster than expected.

The dollar pushed the euro below $1.30 for the first time since November in early European trade. The dollar stood little changed on the day at $1.3055 to the euro. The dollar was up 0.7 percent against the Japanese yen at 102.80, more than a yen above five-year lows hit on January 17.

On January 18, The dollar jumped to a two-month high against the euro on Tuesday as the market swung its attention back to rising US interest rates, a thin ray of light in the dollar's overall weakening trend. The US currency also broke from a five-year low versus the yen hit on Monday as some dealers focused on the Federal Reserve's tightening campaign, although even five rate raises since June have failed to stem the dollar's broad decline.

The euro traded at around $1.3043 as of after briefly falling to around 1.3010, its lowest level since November 23. It was down about 0.1 percent on the day and around 4.7 percent below a record high of $1.3670 hit in December. But the dollar was unable to punch through $1.30 due to a mass of options lined up around that level.

The US currency fetched about 102.60 yen, up 0.5 per cent from its late level in London trade, where the dollar touched 101.67 yen, its lowest level since January 2000. The euro bought 133.80 yen, down around 6 percent from its record high of 141.90 hit on December 30. Many in the market said that near-term currency movements would be driven by competing factors - US rate speculation and European insistence that Asian currencies should relieve some of the pressure heaped onto the euro by a weak dollar.

In London, the dollar bounced back from a five-year low against the yen and hit a two-month high against the euro as market attention swung back to the prospect of rising US interest rates. A heavy schedule of speeches from Federal Reserve officials made investors reluctant to hold short dollar positions, particularly after minutes of the bank's latest policy meeting suggested interest rates may rise faster than expected.

The dollar pushed the euro below $1.30 for the first time since November in early European trade. The dollar had pared gains to stand little changed on the day at $1.3055 to the euro as caution set in ahead of US capital flows data. The dollar was up 0.7 percent against the Japanese yen at 102.80, more than a yen above five-year lows hit a day earlier.