The rupee opened the week on a dismal note. Rising demand for dollar in the interbank market pushed the rupee down against the dollar on July 8, losing 4 paisa to trade at Rs60.14 and Rs60.16 against the previous weekend close of Rs60.11 and Rs60.12 on July 6.

Some foreign and local banks remain engaged in buying dollars to meet short term needs. However, increase in dollar supply after dollar selling by exporters on July 9, helped the rupee to recover its lost ground over the overnight level. It gained 2 paisa over the dollar to trade at Rs60.12 and Rs60.14 at close.

As dollar selling continued, amid low demand on July 10, the rupee posted fresh gains. It traded at Rs60.05 and Rs60.07 during the day following 7 paisa gain against the dollar. Balanced demand and supply of dollar on July 11, enabled the rupee to gain another 2 paisa over the overnight level to trade at Rs60.03 and Rs60.05. On July 12, the dollar touched record lows, as the rupee breached Rs60. mark and posted fresh gains of up to 25 paisa to settle at Rs59.80 and Rs59.85. Had the central bank not intervened and bought $15 million from the interbank market, the parity would have slipped further touching Rs59, according to analysts. Influx of dollar following the IMF positive stance on the GoP exchange rate policy and low inflation rate was the main factor. At the close of the week on July 13, rupee continued making fresh gains and traded at Rs59.75 for buying at the NBP counter in the morning session, up 5 paisa over the overnight level.

Against other major currencies, the rupee at the interbank forex counter failed to maintain its strength over the British pound, the euro, the Swiss franc, the Australian and Singapore dollars, the Swedish krona, the Japanese yen, the Danish and Norwegian krones and the Kuwaiti dinar. It weakened against all these currencies. However, it showed fresh gains over the Saudi and Qatari riyals, the UAE dirham, the Canadian and HongKong dollar, the Chinese yuan and the Malaysian ringgit.

In kerb dealing, the rupee remained steady at Rs60.15 and Rs60.20 against the dollar on July 8, showing no change over the previous week end close. But then it reacted to the changes in parity in the interbank market on July 9, and lost 2 paisa to trade at Rs60.17 and Rs60.22. On July 10, dollar selling by exporters in the interbank market and low demand for dollar in the kerb help the rupee lift the parity by 2 paisa and traded at Rs60.15 and Rs60.20.

The rupee in the herb extended gains over the dollar on July 11 and fallowed interbank market trend amid lack of investors interest in currency trade. It gained 2 paisa at Rs60.13 and Rs60.18 at close. Finally it also breached Rs60 in the herb resting at Rs59.90 and Rs60.00 against the dollar on July 12, the highest in more than seven months. The dollar had last slipped below Rs60 on November 18, last year.

Currency analysts expect the rupee to make some fresh gains in coming days amid low demand due to lack of interest of investors in the absence of moving factors. According to analysts, the rupee could touch Rs58, if the central bank remains in sidelines. Last week the rupee gained 312 paisa in the interbank market and 25 paisa in the herb versus the dollar. Since September 11 events, the rupee has gained about Rs4 against the dollar.

On the international front, the dollar took another battering from the US stocks on July 8 in a rout aided by Japan’s apparent acknowledgement that the dollar would lose ground against the yen. The euro rose 1.60 per cent against the dollar, its biggest percentage gain this year.

The dollar, meanwhile, fell almost 1.5 per cent against the yen, the biggest percentage decline since June 21, when it fell nearly two per cent and set the stage for waves of yen-selling intervention by the Bank of Japan the following week. It was a big comedown for the dollar, which enjoyed hefty gains last week as traders shed long positions in the euro and other currencies ahead of a long US holiday weekend and as the second quarter came to an end.

In Tokyo, the dollar sank across the board in Asia hurt by surprise comments by the Japanese Finance Minister that world financial authorities believed a weakening of the US currency was in progress. It fell more than a yen to 119.00 yen - its lowest level in 10 days, after rising from multi-year lows during the last week. The euro firmed against the dollar to 98.56/61 cents well up from 97.18 in the late US trade. Against the yen, the single currency was slightly firmer at 117.29 yen.

Sterling kept a firm footing against the dollar in London after the threat of the new US accounting scandals damaged the greenback across the board. The pound, which shrugged off static UK producer inflation data, slipped against the euro as news of possible merger and acquisitions involving euro-zone firms fanned speculation of outflows from Britain. Sterling stood at $ 1.5311, having risen more than one per cent earlier to come close to a two-year peak set in late June.

On July 9, sterling rose to a fresh 26-month high against the dollar as the US currency continued to weaken across the board on concerns about the US accounting practices and the fading appeal of the US stocks. The pound rose as far as $1.5480 by its highest level since May 2000, as it followed the euro which surged above $0.99 and to just over half a cent away from parity with the dollar.

In Tokyo, the dollar bounced off a nine-month trough hit early as Japan’s Finance minister clarified his weekend comments that had hammered the greenback, but downward pressure proved strong given corporate America’s growing woes. The dollar was quoted at 118.67 yen up from the nine-month low of 118.32 yen hit in early Sydney trade. The euro edged down to 98.92 cents after briefly rising to 99.15 in Sydney.

In New York, the euro was up 0.26 per cent at 99.38 cents, short of its overnight highs of 99.52 cents, where traders cited some resistance. The dollar slipped 0.24 per cent to 118.06 yen after falling as low as 117.74.

The dollar held just above its 10-month low against the yen in Asian trade on July 10 amid wariness over Japanese intervention, with the damage caused by doubts over accounting practices in the US weighing heavy. Most dealers were inclined to sell the dollar and only refrained from doing so because of a felling that the Bank of Japan could intervene in the market to buy dollars at any minute.

The dollar was at 117.90/96 yen against the late US level of 118.06 yen and the 10-month low of 117.72 hit earlier in New York. The euro was quoted at 99.33137 against 99.26 cents in the late US trade. Against the yen, it was at 117.09/14 yen against 117.20 in late US.

Sterling hit a new 26-month high against the dollar and gained half a per cent versus the euro in London after a surprise jump in British manufacturing production Quelled speculation of higher UK interest rates.

The pound was trading at $1.5471, after hitting a high of $1.5530 as the dollar was battered across the board early on by the US corporate accounting concerns. It also traded at 63.87 pence per euro compared with 64.13 pence late in New York a week earlier, helped by the dollar’s stock market-inspired revival against the single currency in the European afternoon.

The dollar rose against a sluggish euro despite big declines in the US stocks but slid more than a third of a per cent against an emboldened yen. Over the past few months, the dollar has been on a more or less steady downtrend as international investors, spooked by a seemingly endless parade of corporate scandals, lighten their positions in the US equities.

The euro was trading at 98.82 cents down 0.42 per cent against the dollar in the session and almost a cent below the day’s 99.69 cent high. The yen, meanwhile rose against the dollar to 117.63 yen per dollar by late afternoon, helped by the weaker stock market and unencumbered by even the hint of intervention from Japan. The dollar’s loss to the yen totalled 0.36 per cent. At session highs of 117.40 yen per dollar, the yen was at its highest versus the greenback since late September 2001.

On July 11, the dollar extended its slump against the yen, sliding below 117 yen for the first time since late last September and heightening expectations that Japan will come to the greenback’s rescue. It also gave up modest gains against the euro, which bounced back above 99 cents as the declining US stocks took their toll on the greenback.

In New York trading midday, dealers prodded the dollar to a low of 116.51 yen - a decline of nearly one per cent from the prior US close - while keeping a sharp eye out for action by the Japanese monetary authorities. Japan has intervened to stem yen strength seven times since late May on concerns that an overly strong yen will hurt the export-led economy. The dollar is down 11 per cent against the yen this year, and has made fresh lows for 2002 for four straight trading session. The euro also slipped sharply against the yen to a 1-1/2 month low of 115.26 yen, which helped spur the latest dollar slide against the Japanese currency. By US midday trading, however, it had bounced half a yen to trade at 115.75 yen, down around 0.50 per cent on the day.

The dollar seesawed near its 10-month low versus the yen in Asia as wariness that the Japanese authorities may intervene to prop up the currency restrained dealers who were tempted to sell. It was at 117.68/73 yen virtually flat on its late New York levels but still some way above a 10-month low of 117.37 hit in earlier US trade.