On December 13, importers’ demand for dollar pushed the rupee’s value down by four paisa, with the dollar trading at Rs59.82 and Rs59.83. Year-end buying by the importers for oil and other bills’ payments and strong demand by the Hajis strengthened the dollar’s value.
On December 14, weak sentiments prevailed as the rupee failed to resist erosion versus the dollar, shedding another three paisa to change hands at Rs59.85 and Rs59.86.The local currency lost seven paisa in the first two days trading this week as a result of importers’ dollar buying.
On December 15, downtrend continued in inter-bank market as the rupee lost two paisa for buying and slid three paisa for selling to trade at Rs59.87 and Rs59.89. On December 16, the rupee turned lower with marginal losses for buying on increased demand for the dollar, but retained its overnight level at the selling counter, as dollars’ supply was enough to meet banks’ requirement, thereby closing the day almost unchanged at Rs59.88 and Rs59.89.
Weaker trend was seen in the open market as the rupee shed three paisa against the dollar for buying and five paisa for selling to trade at Rs60.08 at Rs60.15 on increased demand for the US currency on the opening day of the week in review. The rupee shed two paisa more against the dollar for buying at 60.10 while it maintained its overnight rate for selling at 60.15 on the week’s second day.
On the third day of the week in review, the rupee remained unchanged at its overnight levels of Rs60.10 and Rs60. It also remained unchanged versus the dollar on the fourth day of the week in review. But on the fifth day of the week, the rupee shed five paisa for selling, while it remained unchanged for buying, trading at Rs60.10 and Rs60.20. Over the previous week, the rupee, however, lost five paisa for buying and ten paisa for selling this week.
Against the European single common currency, the rupee came under pressure, losing 25 paisa at Rs70.75 and Rs70.85 on December 12, on continued firmness of the single European currency in the world. On December 13, the rupee suffered heavily versus the euro as the single
The European currency surged and gained 50 paisa changing hands at Rs71.25 and Rs71.45.
On December 14, the rupee extended its weakness versus the euro, losing 30 paisa further to trade at Rs71.70 and Rs71.80, but on December 15, the euro gave up overnight gain versus the rupee, losing 10 paisa changing hands at Rs71.60 and Rs71.70. The rupee did not show any change on December 16, and trade at its overnight levels of Rs71.60 and Rs71.70.
In the world financial markets, the dollar lost ground against major currencies, as investors speculated that the Federal Reserve may signal this week that the US interest rates that have driven this year’s dollar rally are close to a peak. The dollar fell on those comments and triggered automatic stop loss orders around $1.1840, traders said.
As a result, the euro hit a five-week high at $1.1983, up 1.4 per cent, before trading at $1.1955 in New York on the week’s opening day. Earlier, the euro forged to a lifetime high against the yen of 143.61 yen. The dollar was down 0.8 percent at 119.66 yen. The pound jumped to a five-week high versus a broadly weaker dollar. It was up 0.91 per cent against the dollar to $1.7710 after earlier rising as high as $1.7757, it highest since November 3.
On December 13, the dollar pared gains after the Federal Reserve raised interest rates as expected but dropped reference to policy “accommodation” in its outlook statement, hinting to some currency investors that the central bank was nearing the top of its rate tightening cycle. But the dollar didn’t lose much ground as markets mulled the fact the Fed also signalled more rate rises were in store, analysts said.
The euro climbed to test five-week highs around $1.1985 from around $1.1930 shortly before the Fed announcement. By late afternoon, the euro eased back down to $1.1941, down about 0.1 per cent from its previous days close. Against the yen, the dollar initially slipped to around 119.74 yen from around 120.15 shortly before the announcement but later edged up to 119.91, 0.2 per cent up on the day. Against the Swiss franc, the dollar was up 0.2 per cent at 1.2932 francs. Sterling was down 0.3 per cent at $1.7695.
On December 14, the dollar plunged after a report showed the US trade deficit hit a record high in October, worsening overnight losses on concerns the Federal Reserve is nearly done raising interest rates. The US currency’s decline was its steepest against the yen in a single day since March 2002. The dollar sank to its lowest level in a month against the yen, around 116.72 yen.
In New York, it traded at 117.29 yen, down 2.2 per cent on the day. Meanwhile, the euro jumped to a near six-week high of $1.2061, up around one per cent compared with the previous day, before settling back to $1.1996. Sterling pared early gains against the dollar. It was up 0.28 per cent against the dollar at $1.7741, after having hit a six-week high earlier in the session beyond $1.7781.
On December 15, the dollar moved higher against the euro, as sentiment improved somewhat after a report showed record capital flows into the US assets in October. But the predominant theme in the market remained yen strength as the Japanese currency continued to rebound in a huge positioning reversal. The yen’s broad rise was propelled by investors unwinding interest-rate driven trades as the year end approaches.
In late trading in New York, the dollar rose only modestly against the euro. It was at $1.1974, down about 0.2 per cent from a day earlier. But against the yen, the dollar was down 0.9 per cent to 116.23 yen after earlier hitting a six-week low of 115.84. Against the Swiss franc, the dollar was up 0.6 per cent at 1.2891 francs. Sterling was down 0.4 per cent at $1.7646.
At the close of the week on December 16, the yen shot to a six-week high against the dollar and a one-month peak versus the euro, extending its rapid rally this week as yet more traders bought back the Japanese currency after a year-long slide.
The yen’s huge turnaround this week has prompted officials from Japan’s Finance Ministry to sound warnings they are keeping a close eye on the currency.
It was buying 115.80 yen, down 4.8 per cent from a 32-month peak around 121.40 yen hit earlier this month. Sterling drifted to slightly stronger levels against both the dollar and the euro, in the absence of any major British data or other market-driving news. It was 0.3 per cent higher against the dollar at $1.7707, and 0.15 per cent firmer versus the euro at 67.73 pence.