As a result, the week commenced on a firm note, with the rupee/dollar parity in the inter bank market unmoved from its weekend level of Rs60.70 and Rs60.72 on comfortable dollar supply. Continued inflows of US dollar kept the rupee/dollar parity unchanged for the second day in a row. The rupee traded almost stable versus the dollar, which was quoted at Rs60.71 and Rs60.72 on March 6.
On March 7, the rupee moved both ways versus the dollar. It gained one paisa on the buying counter and lost one paisa on the selling counter trading at Rs60.70 and Rs60.73 on slight increase in dollar demand amid easy dollar supply. The rupee continued to hold ground against the American currency on March 8. Though demand for dollar existed in the market but sufficient dollar supply restricted any fall in the rupee value. The parity remained unchanged at its overnight levels.
The supply of dollars was sufficient to help the rupee move both ways in a narrow range March 9. It. However, lost one paisa against the dollar for buying but gained one paisa for selling to trade at Rs60.71 and Rs60.72 in the inter bank market. During the week in review, the rupee maintained a stable trend in the inter bank market.
In the open market, the rupee drifted lower against the dollar on the first day of trading as it lost three paisa from its previous week close of Rs60.67 and Rs60.72 and traded at Rs60.70 and Rs60.75 on March 5. On the second day of trading, the rupee moved both ways in relation to the dollar. It gained two paisa for buying and lost three paisa for selling, trading at Rs60.68 and Rs60.78 on March 6.
On the third day of the week in review, the rupee continued to move both ways. But this time, it lost two paisa on the buying counter and recovered five paisa on the selling counter, amid slightly high dollar demand and tight supplies. As a result, the dollar traded at Rs60.70 and Rs60.73 on March 7. On the fourth trading day, the rupee/dollar parity traded unchanged at its overnight levels. On March 9, the rupee did not show any major change against the dollar and remained intact at its overnight rate for buying while it shed two paisa for selling and traded at its previous weekend levels of Rs60.70 and Rs60.75.
Versus the European single common currency, the rupee opened the week in review on a positive note, as it managed to recover 28paisa over its previous week close of Rs79.83 and Rs79.93, changing hands at Rs79.55 and Rs79.65 on March 5. The rupee further picked up 24 paisa on March 6 and traded at Rs79.31 and Rs79.41 against the euro. However, the rupee was unable to hold its firmness versus the European single common currency on March 7. It lost 12 paisa on its overnight levels and traded at Rs79.43 and Rs79.53
The downward trend persisted on March 8, as the rupee further weakened versus euro for the second consecutive day, shedding 33paisa to trade at Rs79.76 and Rs79.86. However, the downtrend reversed on the fifth trading day, as the rupee gained 14paisa for buying and 11paisa for selling against the euro, which was quoted at Rs79.62 and Rs79.75 on March 9. Over the previous week, the rupee managed to gain 22paisa this week.
In the world market, the yen climbed against the dollar on the opening day of the week for the third consecutive session as investors watching falling global stock prices continued to unwind risky trades funded by borrowing cheaply in the Japanese currency. As a result, the dollar sank below 116 yen for the first time since early December, falling around five yen in the past week, due to the swift shift in investors' penchant for risk that began last week following the biggest one-week drop in US stocks since 2003.
In New York trading on March 5, the dollar was down about one per cent at 115.72 yen, after dropping to a three-month low of 115.16 yen earlier in the session.
The euro had fallen as low as 150.89 yen, - its lowest level since late November - and was last down 1.8 per cent on the day at 151.44 yen. The European common currency last week suffered its biggest weekly percentage loss against the yen since August 2003, after hitting a record high near 160 in February.
Meanwhile, the euro was down 0.8 per cent at $1.3090, likely weighed by the euro's losses against the yen. Against the Swiss franc, the dollar traded up 0.4 percent at 1.2210 francs. Market participants said the price action has been concentrated in the yen because of the build-up of short positions. In addition the subsequent flight to safety into US Treasury debt may be supportive for the dollar broadly.
The pound fell one percent to a 3-month low of $1.9185, trading more than 7 cents below January's 14-year high.
On March 6, the yen dropped against the dollar for the first time in three days following a rebound in global stocks. The magnitude and swiftness of the move, which caused the yen to post its biggest weekly percentage gain against the euro since August 2003 and against the dollar since December 2005, made some believe it had run its course for now.
In New York, the euro had risen about 1.2 per cent on the day to 153.21 yen. A week of carry trade unwinding took the euro to a 3-1/2-month low of 150.74 yen earlier from its record high near 160 late in February. The dollar was up 0.9 percent at 116.70 yen. It hit a three-month low of 115.13 a day earlier. The euro edged up 0.2 percent to $1.3125 after hitting 2-1/2-week lows on March 5. It has been trading within a narrow range of $1.3070 to $1.3260 since mid-February. Sterling rose against the dollar, as rallying stock markets curbed a sell-off in the previous session caused by investors unloading risky carry trades. It was up 0.20 percent against the dollar at $1.9256.
On March 7, the dollar fell after a Federal Reserve report showed evidence the US economy is losing steam, two days before the key February payrolls report is due.
It pushed down the dollar and fuelled beliefs that the Fed may have to cut interest rates more than once this year. The euro rose 0.45 percent to $1.3185, within a range of $1.3070 to $1.3260 since mid-February. The dollar fell 0.4 per cent to 116.00 yen. The pound was down 0.1 percent against the dollar at $1.9290. Against the Swiss franc, the dollar fell 0.55 per cent to 1.2167 francs.
On March 8, the dollar climbed against the yen and Swiss franc, with investors feeling a bit more comfortable buying riskier assets financed by borrowing low-yielding currencies, a day before the US payrolls report. But investors remain cautious about diving back into large positions anticipating more yen weakness after last week, when a sudden spike in risk aversion pushed up the Japanese currency to 3-month highs and sent global equity markets tumbling.
The dollar rose 0.9 per cent to 117.05 yen, though it gave up some gains after US stock indexes softened off the intraday highs. The dollar's advance against the yen was the biggest since early December. The euro was down 0.3 per cent at $1.3133. Sterling erased earlier gains and fell versus the dollar after the Bank of England held rates at 5.25 per cent as expected, disappointing a minority who had been speculating about the possibility of a surprise rate hike. It fell against the dollar by 0.2 percent to $1.9284.
At the close of the week on March 9, the dollar edged up in Tokyo, backing off a three-month low against the yen hit earlier in the week as investors shifted funds back into riskier assets even while awaiting US jobs data for clues on the interest rate outlook. Japanese investors remain keen to buy the dollar on any pull-back towards 117.00 yen for those who missed their chance when the US currency slid earlier in the week, traders said.
The dollar inched up to 117.35 yen up slightly on the day from near 117.15 yen in late New York trade and clawing back from a three-month low of 115.16 yen hit on March 5. The single currency climbed to $1.3150 from $1.3130. The euro had dipped on March 8 after the European Central Bank lifted rates to a five-year high of 3.75 per cent as widely expected. Sterling was up 0.15 per cent versus the dollar at $1.9306.