The rupee gained four paisa on smooth supply of dollar; closing the day versus the dollar at Rs60.69 and Rs60.71 on March 19, against last week close of Rs60.65 and Rs60.67. Demand for dollar persisted in the inter bank market on the second day of the week in review. However, smooth dollar supply helped the local currency to hold its firmness versus the dollar, which traded unchanged at Rs60.69 and Rs60.71 on March 20. No major change was witnessed in the rupee/dollar parity o the third day of the week in review. Easy supply of dollars resisted any sharp decline in rupee value despite the strong demand by the different banks. The dollar was seen changing hands versus the rupee at Rs60.68 and Rs60.70 on March 21, as the rupee managed to gain one paisa over the dollar.
However, on the fourth day of trading, the rupee, unable to hold its previous three days strength versus the dollar, shed two paisa and traded at Rs60.71 and Rs60.72 on March 22. Trading in inter bank market remained suspended on the fifth day of the week in review on account of Pakistan Day holiday on March 23. During the entire week in review, the rupee in the inter bank market lost two paisa on the buying counter and one paisa on the selling counter versus the dollar.
In the open market, the rupee/dollar parity showed a stable trend on the first day of trading during the week in review. The rupee traded unchanged at its previous weekend’s levels ofRs.60.70 and 60.80 versus the dollar on March 19. The rupee continued unchanged on the second trading day of the week as the parity maintained its stable trend amid quiet trading on March 20.
After remaining unchanged for two consecutive days this week, the rupee in the open market lost five-paisa on the third day changing hands at Rs60.75 and Rs60.85 versus the dollar on March 21. The rupee extended its weakness versus the dollar in the open market on the fourth day of trading, shedding five paisa to trade at Rs60.80 and Rs60.90 on March 22. This week, the rupee lost ten paisa against the dollar in the open market.
Versus the European single common currency, the rupee commenced the week on a stable note and traded unchanged at its previous weekend’s levels at Rs80.48 and Rs80.58 on March 19. However, it managed to recover ten paisa on March 20, when the euro traded at Rs80.38 and Rs.8048. But the rupee overnight strength over the European common currency proved short lived on the third day of trading, as the rupee lost 15paisa on March 21, when the euro was seen changing hands at Rs80.53 and Rs80.63.
On the fourth trading day, the euro crossed Rs.81 barrier for the first time this year, as rupee lost 47paisa in a single day trading touching new lows at Rs81.00 and Rs81.10 on March 22. The local currency market throughout the country remained closed for trading on March 23 being public holiday on account of Pakistan Day. During the week in review, the rupee on cumulative basis lost 52paisa versus the European single common currency.
In the international financial market, the Japanese yen dipped against the dollar on March 19, as a rash of corporate merger news bolstered global stock markets, reviving investors' appetite for risk. The Japanese currency had gained in recent weeks as stock prices fell, which caused investors to shy away from risky carry trades, which are often financed with yen. The dollar was up 0.6 percent at 117.40 yen. The dollar also rose 0.1 per cent against the euro, last changing hands at $1.3295 per euro. Sterling was up 0.2 per cent to $1.9450.
On March 20, the dollar fell against the yen after a magazine reported that China would stop stockpiling foreign exchange reserves and slipped against other major currencies as investors remained wary of risky trades. The dollar dipped to a session low of 116.93 yen, and was last trading at 117.22, down nearly 0.3 percent on previous day. It had touched 118.01 in overseas trade. The euro traded at $1.3315, up 0.1 per cent.
Sterling rose 1-1/2 US cents to hit a three-week high against the dollar after above-consensus inflation data boosted expectations for another British interest rate hike. Initially it rose to $1.9606, its highest in nearly three weeks, from pre-data levels around $1.9447, but trimmed gains to $1.9569 towards the close of the day. The euro fell to a one-week low of 67.82 pence, down 0.7 per cent on the day - on track for its biggest one-day loss in two months in percentage terms
On March 21, the dollar tumbled to a two-year low against the euro after the Federal Reserve held interest rates steady but dropped a reference in its statement to possible further interest rate increases. Though the Fed reiterated that inflation remains a concern, investors interpreted the language change as a sign that an interest rate cut may be near. The euro shot up to $1.3390, its highest since March 2005, after the statement's release, before settling around $1.3385, up 0.5 percent. The dollar also weakened against sterling and high-yield currencies such as the Australian dollar.
The dollar fared best against the low-yielding yen, paring gains to 117.55 yen after hitting a peak of 117.95 yen earlier. Japanese interest rates are just 0.5 percent. US interest rate futures, meanwhile, were pricing in a 48 per cent chance of a rate cut by the end of June, up from 26 per cent before the Fed's statement was released.
Sterling erased earlier gains against the dollar. It was a touch softer on the day at $1.9588, recovering from a session low of $1.9556 hit in the immediate aftermath of the minutes, but still some way below an earlier three-week high of $1.9652.
On March 22, the dollar rose sharply recouping the prior session's losses on the view that the Federal Reserve may continue holding interest rates steady for some time to come. The Fed left borrowing costs at 5.25 per cent this week but dropped language used in earlier policy statements that signalled it was more inclined to choke off inflation by tightening credit than to promote growth by cutting rates.
That shift pushed the greenback to a two-year low against the euro, as markets took that to mean a rate cut may be near.
The euro was down 0.4 per cent on the day at $1.3334. At one point, it fell a full cent from its overnight peak of $1.3411, a two-year high. The dollar was up 0.4 per cent to 118.11 yen and up 0.4 percent at 1.2140 Swiss francs. The pound had hit a fresh six-week peak of $1.9728, up almost 50 ticks from levels seen before the sales data before retreating slightly to $1.9694 - steady on the day. Sterling hit a 14-year peak of $1.9917 in January on flourishing carry trades.
At the close of the week on March 23, the dollar steadied against the euro and yen, retaining gains made the previous session on views that the Federal Reserve may keep interest rates on hold for some time. The euro was little changed against the dollar around $1.3330. The single currency had climbed to $1.3412 in the previous session, the highest since March 2005, as investors bet the European Central Bank will further boost interest rates this year from the current 3.75 percent. The dollar was also little changed at 118.15 yen. It rose 0.4 per cent against the yen in the previous session. Sterling was down 0.4 per cent against the yen at 231.12 yen. It was down 0.1 per cent versus the dollar at $1.9622.