THE local currency market witnessed a marginal increase in dollar demand for import payments last week, exerting slight pressure on the local currency in the interbank dealings.

Sufficient liquidity with the commercial bank, however, restricted dollar rise against the local currency amid range bound trading.

Pressured by the slight increase in dollar demand from importers, the rupee posted four paisas loss in the first trading session in the interbank market that enabled the dollar to climb to Rs104.73 and Rs104.74 from the last closing at Rs104.69 and Rs104.70. In the second trading session, the rupee managed to trim overnight losses as it recovered seven paisas on the buying counter and six paisas on the selling counter with the dollar drifting lower at Rs104.66 and Rs104.68.

In the last trading session, the rupee, however, managed to recover overnight losses, closing the week at Rs104.66 and Rs104.68 after picking up two paisas on the buying counter and one-paisa on the selling counter. During the week, the dollar in the interbank market lost three paisas on the buying counter and two paisas on the selling counter against the rupee on a week-over-week basis.

Manages modest gains against the euro

In the open market, the rupee/dollar parity showed a stable trend throughout last week, amid lacklustre trading. After closing the previous week with 30 paisas gain against the dollar, the rupee commenced last week unchanged at Rs104.70 and Rs104.90. Easy dollar supply was sufficient to meet the demand.

The parity traded flat at Rs104.70 and Rs104.90 in the following three sessions. Contrary to analysts’ expectations for the rupee depreciation in the second quarter, the rupee seems to have avoided the downturn against the dollar so far with the State Bank of Pakistan’s strict monitoring.

The dollar in the open market thus managed to gain five paisas against the rupee on a week-over-week basis as it climbed to a two-week high against a basket of currencies in the international market.

Against euro, the rupee traded both ways after commencing the week on a positive note, hovering in the range of Rs119/Rs120 and Rs119.25/Rs120.25. Extending previous week’s running streak, the rupee posted 30paisa fresh gain in the first trading session last week with euro drifting lower at Rs119.00 and Rs120.00 against the previous weekend’s Rs119.30 and Rs120.30. The rupee did not show any change in the second trading session as it continued to trade flat at Rs119.00 and Rs120.00 against the euro for the second straight day.

During the week, the rupee picked up 75 paisas against the euro in three sessions while the euro managed to trim the rupee gain by 25 paisas in one session. The rupee still managed to gain 50 paisas against the euro on a week-over-week basis but it has depreciated by 1.8pc over the past 12 months.

Published in Dawn, Business & Finance weekly, May 16th, 2016