Lack of interest amongst currency investors was witnessed this week. The rupee, maintained its firmness over the US dollar, amid fluctuations. On July l, being bank holiday, public dealings remained suspended.

The parity was unchanged in the inter-bank market with dollar trading at previous weekend level of Rs60.05 and Rs60.07. Trading in currency resumed on July 2, but dollar demand and supply was in balance. The dollar continued to trade at its overnight level for the third consecutive day.

However, increase in banks’ demand for dollar on July 3, to cover their foreign payments requirements brought the rupee under slight pressure, which slid to Rs60.09 and Rs60.11, shedding 4 paisa over the overnight level of Rs60.05 and Rs60.07. On July 4, dollar supply remained comfortable and sufficient to meet demand. The parity remained intact. But due to heavy payment requirements, local and foreign banks indulged in increase dollar buying on July 5. Failing to hold its leanness the rupee shed 2 paisa for buying and selling to trade at Rs60.11 and Rs60.13 versus the dollar against previous day’s close of Rs60.09 and Rs60.11. It also reflected 6 paisa depreciation over the previous weekend close of Rs60.05 and Rs60.07.

Against other major currencies, the rupee at the inter-bank forex counter emerged as a stronger currency during the week. lt appreciated versus the Canadian, the Australian, the New Zealand and the Singapore dollars, the euro, the British pound, the Japanese yen, the Swiss franc, the Danish and the Norwegian krones, the Swedish krona and the Kuwaiti dinar. It was however, unchanged against the Hong Kong dollar, the Chinese yuan, the Malaysian ringgit, the Saudi and the Qatari riyals and the UAE dirham.

In kerb trading, the rupee gained 5 paisa on the opening day of the week, where the dollar was seen under selling pressure, trading at Rs60.15 and Rs60.20. The parity continued unchanged on July 2, but then rise in dollar demand by banks on July 3 pushed the rupee down by 8 paisa at Rs60.23 and Rs60.28. It stayed at level on July 4, showing no change in the parity. Low dollar demand due to the lack of investor-interest in dollar on July 5, pushed the rupee further gaining 8 paisa against the dollar to trade at Rs60.15 and Rs60.20 at close. During the week, the rupee continued to display strength, and showed an appreciation of 5 paisa over the previous weekend close. Some currency analysts are of the opinion that the rupee is expected to shed few paisas against the dollar in coming weeks, due to the anticipated increase in dollar demand by the local and foreign banks to meet their foreign payment requirements. In the FY02, the rupee has managed to show a stable trend after depreciating 17 per cent against the dollar in FY01. Over the past 12 months to July 6, the rupee has appreciated by 6.5 by per cent.

In the international financial markets the dollar advanced against major currencies on July I, helped by a report on the US manufacturing sector that outfaced expectations and lent support to the US currency even as the Wall Street stocks fell. The euro finished the US session trading above 99 cents, unchanged from its prior US close and less than a cent from the 28-month high it reached last weekend.

The dollar traded near 119.75 yen, up 0.15 per cent on the day and below the 120.36 spike high reached when the BoJ - with the European Central Bank and the Federal Reserve acting on its behalf — intervened to sell yen. The dollar was supported by the worries over possible further yen selling by the Bank of Japan after it intervened on June 28, through both, the European Central Bank and the Federal Reserve.

In Tokyo, the intervention had lifted the greenback to 120.40 yen from a nine-month low of 118.36 yen, but resistance proved stiff: The dollar was buying around 119.45 yen against last week’s late US level of 119.59. Market participants said they were reluctant to chase it significantly below 119.50, seen as a level where the BoJ could step in.

Sterling edged further away from last week’s two-year peak against the dollar as gains on the Wall Street underpinned the vulnerable greenback across the board. The pound had slipped to $1.5308 from $1.5333 in late New York, off last week’s peak of $1.5380. It had fallen versus the euro to come close to last week’s 33-month low early in the European trading but erased losses later to stand unchanged on the day at 64.63 pence.

On July 2, the dollar gained back some strength on short-covering in Tokyo supported by the fears of more intervention and strong manufacturing US data, but the long-term trend was gloomy. It briefly broke through 120-yen and firmed to around $0.9820 per euro by late trade as short-holders unwound their positions ahead of the US Independence Day holiday on July 4.

The firm tone carried over into Asian trade, where the greenback advanced to 120.00/03 yen from 119.65 in late US trade on July 1. The euro was at $0.9835/40, against $0.9916 in the late US trade. Dollar bears have built up short positions due to the security fears in the United States near Independence Day, but focus seems lo have shifted to the bright signs emerging in the US economy.

Europe’s common currency fell more than half a cent versus dollar as a failure to rally above parity the previous day prompted some investors to sell the European unit. Negative sentiment surrounding the dollar has yet to dissipate because of the selling pressure on the US stock markets. However, analysts said the euro’s failure to hurdled $1.00 led to modest capitulation selling, which should clear the way for a resumption of the euro’s trend higher.

At the close of the US session, the euro traded near 98.50 cents against the dollar, down 0.60 per cent from its prior US close after reaching a 28-month high last week. The dollar settled at 119.80 yen, up 0.12 per cent from its previous US close. The currency pair was supported by the market’s -fear that the Japanese monetary authorities could again intervene to sell yen, in order to prevent it from quashing Japan’s budding economic recovery.

In London, sterling bounced against the euro and trained losses on the dollar after the Bank of Finland governor warned of the higher UK rates, ahead of this week’s rate-setting meeting by the Bank. It had risen to 64.24 pence per euro, up nearly two thirds of a per cent from the late New York levels a day earlier. George’s comments also helped the pound trim its losses against the broadly firmer dollar, trading at $1.5315 compared with $1.5325 in late New York.

On July 3, the dollar rose more than half a per cent against the euro in New York as modest losses on the Wall Street monetarily counterbalanced market pessimism over the US assets. Appetite to trade was diminished ahead of the US Independence Day holiday. Dealers harbour broadly negative sentiment about the dollar given its recent slide, but grudgingly bought the US currency as major US stock indexes were able to hold selling pressure at bay.

In late US trading, the Europe’s common currency hovered near 98 cents against the dotter, at a one-week low and well below last week’s 28-month high at 99.90 cents. The dollar hovered near unchanged against the Japanese yen just below 120 yen, with most traders mindful that the Japanese authorities could intervene expectedly to sell their currency - whose strength threatens to undermine Japan’s fragile economic recovery.

The dollar was at 120.14/19 yen, a touch above 119.82 in late New York but off the previous day’s high of 120.75. The euro was easier at 98.25/30 cents compared to 98.60 in late US dealings. The single European currency slipped to 118.02 yen against late New York’s 118.22.

Signs of a slowdown in Britain’s dominant services sector helped knock sterling down a cent against a re-energized dollar although the pound kept its footing against an equally fling euro. The dollar clawed background across the board as investors who had bet on a longer slide in the greenback were forced to buy it back ahead of the US Independence Day holiday. Sterling was nursing losses of two-thirds of a per cent at $1.5255 in late European trade, moving further away from the two-year highs scaled last week. The pound stood at 64.25 pence per euro, virtually unchanged on the day, having wiped out early gains in the wake of the weak economic data.

On July 4, sterling hit a two-week high against the euro on July 4, buoyed by a newspaper report that the British government may hold a referendum on joining Europe’s single currency before 2005. A Bank of England decision to leave interest rates unchanged had little impact on the pound, which later eased from highs of 63.90 pence per euro as markets entered a holiday lull.