DULLNESS prevailed in the inter bank market throughout the week. There was less buying interest, as major investors stayed off the market. The rupee managed to hold its firmness against the dollar. It traded in a narrow range.

After opening the week on a stable trend on June 17, at Rs60.08 and Rs60.10, the rupee fell marginally in the following two days. But it continued to show strength over the dollar. The rupee recovered 4 paisa on June 20 with the dollar trading at Rs60.06 and Rs60.08 against the overnight level of Rs60.10 and Rs60.11. The rupee maintained its overnight level unchanged at Rs60.06 and Rs60.08 on June 21, amid low business, owing to the declining demand for dollar. Over the previous week-end close the rupee this week showed an appreciation of only 2 paisa.

In kerb trading some positive steps taken in the budget to boost the economy had immediate impact on the rupee/dollar parity. The rupee managed to gain 25 paisa on the opening day of the week, which traded at Rs60.05 and Rs60.15 against the dollar on June 17, versus the previous weekend level of Rs60.30 and Rs60.40 on June 15. However, a slight increase in dollar demand on June 18 pushed the rupee down shedding 5 paisa to trade at Rs60.10 and Rs60.20 against the dollar. The rupee lost another 12 paisa on June 19, due to the prevailing demand, which pushed it down further to trade at Rs60.22 and Rs60.27. The parity did not show any change on June 20, and the rupee traded unchanged at its overnight level. It, however, showed slight fluctuation on June 21 and shed 3 paisa for buying and 8 paisa on selling to trade at Rs60.25 and Rs60.35, still 5 paisa higher against the previous week end close of Rs60.30 and Rs60.40.

In international financial market the dollar managed only a limp rally on June 17, despite the US stocks posting hefty “aims, underlining the currency market’s deep-rooted concerns about the US corporate health. It, however, managed to add only 0.23 per cent against the Japanese yen by late afternoon, and the euro was off just 0.19 per cent versus the dollar. The euro is up 10 per cent against the dollar since the beginning of February, while the dollar has slumped by 8 per cent against the yen amid concern over weak the US stocks prices and a widening current account deficit. Euro/yen was trading at 117.38 in the New York afternoon, flat from late on June 14. Sterling stayed largely unchanged against the dollar in London, but followed the US currency up against the euro. Against the dollar, sterling stood at $1.4770, slightly up on the morning’s $1.4760. The euro was worth 63.76 pence, weaker than the morning’s 64.03 pence and more than a penny off this month’s 2-1/2 year high. Sterling was expected to have a busy week. The dollar was trading at $0.9424/29 per euro, one cent above 17-month lows of $0.9523 set at the previous week end close in the immediate aftermath of the weak US consumer sentiment data. It traded firmer at 124.25/28 yen, off session lows of 124.05 yen

The dollar found some support against the yen in thin Tokyo trade. The market seems unwilling to build new short positions now after seeing aggressive interventions when the dollar fell below 124 yen. The dollar stood at 124.30/40 yen against last week’s US level of 124.14/24 yen. The euro stood at $0.9447/55 against the US level of $0.9457/62. It failed to maintain a 17-month high of $0.9525 reached in the US trade. The euro was little changed at 117.43/61 yen against 117.24/42.

On June 18, the euro posted modest gains against the dollar and the yen in Tokyo as players were anxious to build fresh euro-longs, having seen the dollar struggle despite a rally on the Wall Street. Relatively strong euro-buying on the yen from trust banks, possibly on behalf of the Japanese pension funds, and the US fund operators emerged in early afternoon to send the single currency to an intraday high of 118.03 yen. Reflecting that move, the dollar edged up after triggering stop-loss orders at 124.50 yen but met stiff sell orders around the day’s high of 124.64 yen.

The dollar’s gains were expected to be limited as the market remained unconvinced that the US stocks will continue to rise after their strong rally a day earlier. The dollar stood at 124.51153 yen compared to 124.33 yen in late US trade on June 17. The euro was quoted at $0.9461/66 against the late US level of $0.9442 overnight. Against the yen, the euro fetched 117.86 yen versus 117.40.

In London sterling hit a 17-month high against the dollar as renewed doubts over the sustainability of the US recovery knocked the dollar back across the board. It rose almost a cent to 1.4876 in late European trade, its highest since January 2001. The British currency has gained more than two per cent against the dollar this year, under-performing the single European currency, which has notched up against the greenback of more than 6.5 per cent. Sterling was little charmed against the euro at 63.80 pence. The euro has gained more than four per cent against the pound since the start of the year.

In New York the dollar stabilized on June 19 near 17-month lows against the euro and a 2-l/2-year trough versus the Swiss franc, as investors remain wary of the US assets given the slow progress of economic recovery. The euro hit 95.80 cents in European trading, its highest level since January 2001, before sliding back to 95.47 cents, up 0.28 per cent compared with Tuesday’s New York close. The dollar fell to a fresh 2-1/2-year low of 1.5384 Swiss francs after bombing as investors sought a safe haven amid rising geopolitical tensions. The dollar fell to 123.96 yen, a loss of 0.28 per cent on the day but above the 123.64 yen low and its weakest point since June 4, the day on which Japan last intervened to sell its currency in an attempt to protect its fragile export market.

In Tokyo weakening dollar sentiment pushed down the greenback to a 17-month low against the euro on Wednesday as traders fretted over the feeble US stock market and rising tensions in the Middle East. The European currency rose as high as 95.43 cents in early Asian trade before settling down around 95.33, slightly firmer than 95.20 in late New York. The dollar suffered from the news that Israel would retake parts of the West Bank after another suicide bombing. The greenback remained steady at 124.25 yen little moved against 124.31 in late New York supported only by fears of intervention by the Bank of Japan.

In London: Sterling set 17-month highs against the dollar before falling against both dollar and euro after a treasury official raised the issue of joining the single European currency. The pound touched highs of $1.4948 in the European morning session, capitalizing on a broadly weak dollar. Ed Balls, chief economic adviser to Chancellor of the Exchequer Gordon Brown, said sterlings exchange rate was not a hidden test, to add to the five the government says it will undertake before recommending Britain join the single currency, but he did say it “would be perverse” not to consider it. But Balls’ comments knocked out some of its support, which combined with profit-taking to send it down to around $1.49. Against the euro, sterling took a bashing, losing more than half a per cent on the day down to the week’s lows at 64.25 pence.

On June 20 the dollar stayed under pressure in Tokyo, briefly hitting g a 17-month low against the euro, as weakness on Wall Street and fears of possible attacks on the United States undermined sentiment. The dollar suffered renewed selling earlier in the morning when the White House was evacuated as an unidentified aircraft circled Washington, raising fears of a fresh attack on the US.

The greenback dropped as low as 123.82 yen and the euro rose to a 17-month high of 95.85 cents following the news. Against the yen, the euro was little changed at 118.72/77 yen slightly above its late US levels of 118.65 yen. The dollar was quoted at 123.95/98 yen below the l24 yen line, which is considered a major defence line for the Japanese authorities.

Sterling pushed up to a new 17-month high against the dollar in London after the release of weak US trade data slammed a greenback already troubled by weak stock markets and a slow economic recovery.