The rupee mostly retained its level versus the dollar as supply was enough to meet the market demand on October 11. It fluctuated in a narrow range showing one paisa fall at Rs59.73 and Rs59.75. Increased inflow by the overseas Pakistanis helped the local currency to sustain its present level despite higher demand by the corporate sector for payments.
On October 12, the rupee showed gradual fall versus the dollar and traded at Rs59.73 and Rs59.75, amid higher demand for the greenback. It, however, picked up one paisa versus the dollar, changing hands at Rs59.72 and Rs59.73 on October 13. On October 14, the rupee moved slightly against the dollar, shedding one paisa for selling to trade at Rs59.72 and Rs59.74. During the week in review, the rupee in the inter bank market remained almost stable versus the dollar, amid slight fluctuations.
In the open market, the rupee recovered more five paisa against the dollar for buying and rose by 10 paisa for selling at Rs60.05 and Rs60.10 on October10. On October 11, the rupee shed two paisa against the dollar, which traded at Rs60.07 and Rs60.12. Due to major demand for dollar by the leading banks on October 12, the rupee tumbled versus the dollar after shedding three paisa for buying and eight paisa for selling to trade at Rs60.10 and Rs60.20.
On October 13, the rupee-dollar parity was unchanged due to improvement in dollar supply. Upward trend was seen on the open market on October 14, when the rupee maintained its appreciation against the dollar, gaining five paisa for buying and 10 paisa for selling, changing hands at Rs60.05 and Rs60.10. The previous week closed at Rs60.10 and Rs60.20.
Against the European single common currency, the rupee gained 10 paisa trading at Rs72.20 and Rs72.30 on the opening day of the week. The euro ended last week at Rs72.30 and Rs72.40. On the following day the rupee managed to gain 80 paisa against the euro changing hands at Rs71.60 and Rs71.70.
On the third day of the week in review, the rupee further gained against the euro, picking up 20 paisa for buying and 10 paisa for selling at Rs71.40 and Rs71.60. On the fourth day of the week, the rupee depreciated versus the euro, shedding 30 paisa for buying at Rs71.70 and 20 paisa for selling at Rs71.80.
The rupee did not show any variation versus the euro on the fifth day of the week and remained traded at its overnight level of Rs71.70 and Rs71.80. Over the previous week close, the rupee, however, managed to recover 60 paisa versus the European single common currency this week.
In the world markets, with Japan, Canada and much of the United States closed for business on October 10, due to holidays, virtually all the moves on global currency markets came in European trading. The euro got a brief lift after news that conservative and economic reformer Angela Merkel will become Germany’s new leader.
The euro traded at $1.2067, down 0.4 percent from last week. The dollar was up 0.3 per cent against the yen at 114.13 yen. Against the Swiss franc, the dollar gained 0.4 per cent to 1.2831 francs, while sterling fell 0.3 per cent to $1.7557.
On October 11, the dollar strengthened consolidating earlier gains after the minutes of the Federal Reserve’s last policy meeting suggested the central bank won’t stop raising interest rates to fight inflation any time soon. The dollar’s rise lifted it to a 2-1/2-month peak against sterling and a 17-month peak against the yen.
The dollar was already on a firm footing before the minutes, taking advantage of euro weakness owing to waning market enthusiasm for Germany’s incoming government. The euro was struggling on concerns a coalition between Germany’s main parties might dilute reforms in Europe’s largest economy.
The euro was down 0.7 per cent on the day at $1.1994, while the dollar was up about 0.4 percent at 114.55 yen. It had earlier traded as high as 114.65 yen, a 17-month high. Sterling was down 0.6 per cent on the day at $1.7460. The dollar was up 0.6 per cent against the Swiss franc at 1.2898 francs.
On October 13, the dollar lost ground as investors locked in profits from its recent solid gains. Having run up to multi-month highs against the yen and sterling earlier in the global session, the dollar eased back in New York trading as dealers adjusted positions ahead of key US economic data later in the week.
Late in New York trading, the euro was up 0.3 per cent on the day at $1.2030. Speculation of institutional dollar selling also resurfaced, causing many to attribute the dollar’s weakness to official (euro) bids. Once again, the euro’s dip below $1.20 was short-lived, suggesting demand from longer-term players like central banks remains solid at these relatively low levels.
Meanwhile, the dollar retreated from new 17-month highs against the yen around 114.75 yen earlier in the global session to trade slightly down on the day at 114.34 yen. The dollar was slightly weaker against the Swiss franc at 1.2870 francs. Sterling was also up 0.3 per cent on the day at $1.7515, having briefly dipped below $1.74 overnight for the first time since July 27.
On October 13, The dollar was broadly flat, but not before rallying to fresh highs, including a two-year peak against the yen, on relief buying after a report showed the latest US trade deficit had not widened as much as feared. In intraday trading, the dollar vaulted above the 115.00 yen barrier for the first time since September 2003, absorbing good options-related selling just ahead of that level.
But the subsequent heavy bout of profit-taking spilled over to dollar selling against other currencies. Stop-loss sell orders and position squaring ahead of a heavy slate of US economic data releases on Friday pushed the greenback back down to where it opened the global session.
In late trading, the dollar was at 114.35 yen, broadly flat on the day but well off its 25-month high of 115.10 yen hit earlier. Having sagged as low as $1.1915, the euro recovered more than a cent in late trading to change hands at $1.2030, up slightly on the day. The dollar was little changed against the Swiss franc at 1.2875 francs, while sterling was up 0.1 per cent at $1.7555. The dollar had extended gains after the Commerce Department said the US trade deficit in August was $59.0 billion.
At the close of the week on October 14, the dollar took a breather after a brisk week-long rally on expectations of higher US interest rates that pushed it to two-year highs above the technically and psychologically crucial 115 yen level. A day after reaching that milestone, the market shifted down a gear before the weekend and ahead of the US inflation data that could further fuel expectations that the Federal Reserve will keep raising interest rates.
The dollar has erased its losses incurred against the yen after a watershed Group of Seven statement at the forum’s Dubai meeting two years ago called for flexible exchange rates to correct global imbalances. The dollar was trading around 114.45 yen, little changed from its levels late on October 13, when it touched a two-year high of 115.10 yen.
Dollar bulls in the market were not done, although it may take a while for the currency to establish a firm foothold above 115 yen and head towards 120 yen. The dollar hovered just over a cent below previous day’s one-week highs against the euro, trading at around $1.2035 to the single European currency. Sterling hit one-week highs against the dollar and rose against the euro in the absence of major UK data, as markets continued to examine the domestic interest rate outlook.
The pound rallied to one-week highs of $1.7652, up nearly half a per cent from the US close, following a choppy day of trading. Sterling rallied 1-1/2 cents against the dollar after weaker than expected US data on core inflation, industrial output and consumer sentiment. The pound also gained from safe-haven buying after it had started unwinding proprietary and client positions. It also rose a quarter per cent against the euro to 68.32 pence, against the previous day’s one-week highs of 68.18 pence and above two-month lows at 69 pence set on October 10.