The rupee/dollar parity showed a stable trend in the outgoing week. Trading activity was slow in inter-bank and kerb markets.

The dollar-demand remained low while supplies were in excess. During the week, the dollar came under heavy-selling pressure as some foreign and local banks were seen selling dollar in the inter-bank market, while in kerb trading some small investors were busy selling dollar ahead of Eid-ul-Fitr.

The rupee, however, managed to improve its firmness over the dollar. In the inter-bank forex market it opened the week unchanged at its previous weekend level of Rs58.50 and Rs58.53. The parity remained at this level for two days due to the lack of interest in fresh dollar-buying. However, the dollar came under selling pressure from local and foreign banks on November 27, which, helped the rupee to gain 10 paisa over the dollar to trade at Rs58.40 and Rs58.45. This upward trend continued amid low dollar demand. In the last two days of the week, the rupee managed to gain another 4 paisa for buying and 7 paisa for selling.

On November 29, the dollar traded at Rs58.36 and Rs58.38 as against the overnight level of Rs58.39 and Rs58.40. Over the week, rupee gained 14 paisa for buying and 13 paisa for selling in the inter-bank market.

In the kerb, the rupee/dollar parity continued unchanged at Rs58.20 and Rs58.30 for the first four days of the outgoing week amid slow trading activity, low dollar demand and excess dollar supply. The rupee, however, closed the week on a positive note, gaining 10 paisa against the dollar to trade at Rs58.10 and Rs58.20 on November 29. The rupee/euro parity on the other hand remained fluctuated throughout the week. Over the week, the rupee managed to gain 35 paisa against the euro. At the close of the week, the euro was quoted at Rs5765 and Rs57.95 against the previous weekend close of Rs58.05 and Rs58.30 on November 23.

Against other major currencies, the rupee at the inter-bank forex counter managed to gain ground versus the British pound, the Australian, New Zealand, Singapore and Hong Kong dollar, the Swiss franc, the Danish and Norwegian krones, the Sewdish krona, the Malaysian ringgit, the Chinese yuan, the Kuwaiti dinar, the Saudi and Qatari riyals and the UAE dirham. It, however, lost ground versus the Canadian dollar and the Japanese yen. On the international front, the dollar rose on November 25, extending a multi-week advance against the European currencies on strong US housing data and expectations the American economy is firming while Europe languishes. However, it gave up ground against the Japanese yen, the greenback failed to rise against the yen as investors booked profits on a 2.5 per cent advance.

Having climbed to a high of 123.19 yen the dollar limped along at 122.63/68 yen by midday in Asia versus 122.96 in late pre-weekend trade. But the profit-taking took the single currency to a three-week low of $0.9930 from $0.9970 and hammered it to a one-week trough on the yen at 121.76 from 122.46.

The greenback briefly broke through a key resistance point at 123.13 yen a 61.8 per cent retracement of its October 21-November 11 decline, but then slipped back. Further resistance lurked around 123.80 yen, the top of an Ichi Moku Kinko Hyo cloud, while a 200-day moving average cap stood at around 124.25 yen.

Sterling fell along with other European currencies against the dollar but the pound underperformed the rest of the bunch as concerns over public finances weighed ahead of this week’s pre-budget report. The sterling was trading down almost one per cent at $1.5655, after falling during the session to almost 1-1/2 cent below last week’s New York close. Sterling also lost over a third of a per cent against the euro and was trading at 63.32 pence per euro.

The dollar’s two-week rally versus major currencies paused on November 26, after a rebound in November, the US consumer confidence from a nine-year low was not enough to satisfy investors who had bet on a bigger advance. The economic data led the dollar lower against the yen and euro, but diminishing prospects of lower interest rates in Britain and hints from the Bank of England that rates could in fact rise led sterling to sell off sharply against the dollar and euro.

The weak US stocks helped the euro rise to $0.9933 up 0.19 per cent from its prior US close and nearly 1/2 of a cent above on November 25 three-week low of $0.9889. The euro trade near 120.75 yen off 0.26 per cent on the day. The dollar fell for a second straight session against the yen as investors took profits on the greenback’s 3 per cent rise from November 11 through previous day’s three-week high. The dollar traded at 121.58 yen off 0.43 per cent on the day.

However, the dollar and the euro made big advances against sterling after the Bank of England officials said interest rates, currently at a 38-year low of 4 per cent, have likely hit bottom, and at the same time raised the possibility they could increase rates if consumer demand did not slow. Sterling fell to a four-week low of $1.5460 before clawing back to $1.5514, still a loss of 0.81 per cent on the day. The euro rose as high as 64.08 pence before slipping back to 63.98 pence, up 0.98 per cent on the day.

On November 27, the dollar fought back from a one-week low on the yen but the move lacked conviction ahead of a deluge of the US data and a holiday later in the week. It was loitering at 121.70/75 yen, off an earlier one-week low of 121.50 and compared with 121.53/61 in late New York. Traders cited bids from the Japanese life insurers, but big flows were assent heading into the US Thanksgiving Day holiday on November 28.

The euro fetched $0.9930/34, moving little from $0.9936/40 in late New York. The unwinding of speculative positions in the euro against the yen also paused after the euro hit a low of 120.59 yen. It was at 120.87/98 yen in late Tokyo trade. The euro had climbed to a three-year high of 123.20 yen earlier this month but analysts said a reversal was well in the works as speculators tried to close out positions.

The dollar eased off recent one-month peaks against the euro and the Swiss franc on November 28 as news of an explosion at a Kenyan hotel frequented by Israeli tourists dented bullishness fuelled by recent upbeat the US data. The greenback rose to a one-month high of $0.9871 per euro on November 27 after a string of encouraging US data convinced traders the world’s biggest economy was on a path to recovery.

But it dipped a third of a per cent to $0.9936 and 1.4847 Swiss francs after reports that a truck loaded with explosives had rammed into a hotel in the Kenyan port city of Mombassa, killing at least 11 people. The dollar also dipped slightly to 122.15 yen but remained in a relatively tight range, with volumes extremely thin due to the US holiday for Thanksgiving Day.