IN the local currency market, the New Year commenced with the dollar at historic lows against the rupee.

Persistent weak macroeconomic indicators and uncertainty on the political front is exerting downward pressure on the rupee in relation to major currencies. The dollar has already crossed Rs90 barrier and heading for a new peak. On the interbank market, trading in currencies remained suspended on the opening day of the week due to Bank Holiday announced by the State Bank of Pakistan on January 2.

However, mounting dollar demand in the second trading session pushed the rupee against the dollar at Rs90.12 and Rs90.15 on January 3, down 19 paisa over the previous week close of Rs89.93 Rs89.96.

The rupee extended its decline in the third trading session when it posted 8 paisa loss on the buying counter and another 10 paisa loss on the selling counter and traded against the dollar at Rs90.20 and Rs90.25.

In the fourth trading session, the rupee traded against the dollar at Rs90.40 and Rs90.45 after rising dollar demand forced the rupee to shed 20 paisa over the preceding day close.

The rupee continued its free fall versus dollar in the last trading session and suffered another 20 paisa before closing the week against the dollar at Rs90.60 and Rs90.65 on January 6. Thus on net basis, the rupee in the interbank market shed 48 paisa, pushing dollar to historic highs this week.

In the open market, the dollar is riding high versus the rupee. It climbed a new peak this week after hitting Rs90 last weekend. Analysts are now predicting that it may soon touch Rs 100 mark.

Though the rupee entered 2012 on a stable note and traded unchanged at the previous week close of Rs89.90 and Rs90.10 against the dollar in the first trading session of the week in review, it failed to hold overnight firmness and lost 10 paisa and traded at Rs90.10 and Rs90.20 at the close of the second trading session. The rupee further slipped against the dollar in the third trading session when it traded at Rs 90.15 and Rs 90.35 after shedding 15 paisa over previous day close.

The downtrend in the rupee/dollar parity persisted for the third successive day on January 5 when the rupee shed another 15 paisa in the fourth trading session, changing hands against dollar at Rs90.30 and Rs90.50.

Finally, the week ended on a negative note as the rupee shed 35 paisa in the last trading session, touching historic lows against the dollar at Rs90.65 and Rs90.85. On week over week basis, the rupee in the open market suffered 75 paisa loss against the dollar this week. In the past one month, the rupee has depreciated by 2.04% versus dollar.

Versus the European single common currency, the rupee weakness persisted this week. In the opening session of the week, the rupee did not show any change and traded at its previous weekend levels of Rs115.87 and Rs116.37 amid dull trade in the open market.

In the second trading session, however, euro traded slightly higher at Rs116.76 and Rs117.26 after the rupee drifted lower on January 3, losing 89 paisa over the previous day close. The rupee further shed 53 paisa in the third trading session to close the day at Rs117.29 and Rs117.79 on January 4.

After shedding Rs1.42 versus the euro in the previous two sessions, the rupee posted 94 paisa gain in the fourth trading session and traded at Rs116.35 and Rs116.85 on January 5.

As euro hits 16-month lows against dollar in the international market, the rupee maintained its surge against euro in the local market and further rose by 78 paisa in the last trading session, closing the week at Rs115.57 and Rs116.07, the week’s highest level. During this week, the rupee posted net gain of 30 paisa against the weakening European single common currency.

On the international front, 2012 commenced the week with most Asian markets as well as the UK and US closed for New Year holidays. Amid thin trade on January 2, however, the euro was steady at $1.2947, less than a cent above its 2011 low of $1.2858 hit last week. The dollar fell to a one-month low of around 76.30 yen before steadying at 76.90 yen.

On January 3, the euro rallied against the dollar, hitting a global session high. It rose to a session high of $1.3076, pulling away from its 2011 trough of $1.2858 hit last week and last traded at $1.3054, up 0.9 percent on the day.

The dollar dipped 0.3 percent to 76.64 yen, not far from the record low of 75.31 yen hit in late October. Sterling rose versus the dollar, up 0.9 percent at $1.5653. It extended gains after reported stop-loss orders were triggered on the break above $1.5600.

On January 4, the euro fell to its lowest level against the dollar in nearly a week and last traded down 0.8 per cent to $1.2946, with a session low of $1.2896.

The greenback was up 0.1 per cent against the yen at 76.74 with a session peak of 76.82 yen. But the pound retreated from early gains against a firmer dollar. Sterling was down 0.2 percent against the dollar at $1.5606, retreating from an earlier climb to a session high of $1.5669.

On January 5, the euro tumbled to its lowest level against the dollar in more than a year, falling as low as $1.2775, its lowest since September 2010, and was last at $1.2782, down 1.2 per cent.

The dollar gained 0.6 percent against the yen to 77.18 yen after trading at a near one-week high of 77.23 yen. Sterling fell nearly 1 percent against the dollar at $1.5466. It was well below the December 21 high of $1.5775.

At the close of the week on January 7, the euro hit a near 16-month low against a robust dollar, down 0.4 percent at $1.2726 after going as low as $1.2696, its weakest since September 2010.

The dollar edged up 0.1 percent against the yen to 77.22 yen, pulling away from a two-month low of 76.30 yen hit earlier this week. Sterling fell around 0.7 percent to $1.5376 before paring losses to trade around $1.5415 in late London trade.