On the opening day of the week, firmer trend was seen in the inter bank market, as the rupee held its firmness due to better supply of dollars. The rupee gained two paisa at Rs60.40, Rs60.42 versus dollar on July 30, after closing last week at Rs60.42 and Rs60.44. Sufficient inflows of dollars supported the rupee/dollar parity on July 31, when the rupee further inched up with one paisa gain versus dollar, changing hands at Rs60.39 and Rs60.41.
On August 1, the rupee maintained its overnight winning streak against dollar, picking up one paisa for buying and further two paisa for selling to trade at Rs60.38 at Rs.6039. The rupee maintained its overnight level against dollar despite higher demand by the importers on August 2. It did not show any change against dollar in the interbank market trading at Rs60.38 and Rs60.39.
The rupee slipped slightly against dollar on August 3, changing hands at Rs60.39 and Rs60.40, down one paisa over previous day's close, amid sufficient supply of dollars to meet the demand. During the week in review, the rupee in the inter bank market, however, managed to gain four paisa over previous week close against the dollar. It depicted a fall of 10 paisa over the past 12 months. The dollar was at Rs.6029 and Rs60.31 on August 4, last year.
In the open market, the rupee held its week-end levels against the dollar and traded unchanged at previous weekend's levels of Rs61.00 and Rs61.10 on July 30. On July 31, the rupee extended its firmness over the US currency gaining five paisa against dollar on buying counter and another 10 on selling counter to trade at Rs60.95 and Rs61.00.
On August 1, the rupee continued its upward advances versus the dollar and picked up five paisa more on the buying counter, while remaining unchanged on the selling counter, changing hands at Rs60.90 and Rs61.00 for the second day in a row. On August 2, the rupee further picked up five paisa on the buying counter but remained unchanged on the selling counter for the third day in a row, trading at Rs.6090 and Rs61.00.
On August 3, the rupee traded unchanged against dollar on the buying counter at Rs60.90, but it managed to pick up two paisa on the selling counter to trade at Rs60.98. Thus, in the entire week, the rupee in the open market managed to recover 10 paisa on the buying counter and 12 paisa on the selling counter versus the American currency. Over the past 12 months, the rupee lost 20 paisa against the dollar, which was at Rs60.70 and Rs60.75 on August 4 last year.
Versus the European single common currency, the rupee commence the week on a happy note as it inched up with slight gain of three paisa, changing hands at Rs82.75 and Rs82.85 on July 30, against previous weekend's levels of Rs82.78 and Rs82.88. However, on the second day of trading, the rupee surrendered its overnight gains and shed 45 paisa against the euro, which was seen changing hands at Rs83.30 and Rs83.40 on July 31.
The rupee managed to recover from its overnight weakness versus the euro on the third trading day of the week by staging a sharp turnaround and gaining 40 paisa to trade at Rs82.90 and Rs82.99 on August 1. It maintained its overnight firmness against euro and traded almost unchanged at Rs82.90 and Rs83.00 on the fourth day of the week in review.
The rupee, however, failed to hold its past two days' firmness against the euro and lost 30 paisa on August 3, to trade at Rs83.20 and Rs83.30. On cumulative basis, this week, the rupee in the local currency market lost 42 paisa versus the European single common currency. As compared to corresponding week of last year, the rupee registered a depreciation of 7.37 percent or Rs6.11 versus the euro which was at Rs76.79 and Rs76.89 on August 4 last year.
In the international financial markets, the Japanese yen fell on the week's opening day, reversing early gains, as US stocks rallied at the end of a volatile session, tempering fears of deteriorating credit markets. Concerns that turmoil in the US subprime mortgage sector has spilled over into the wider credit markets prompted traders to buy yen. The yen earlier hit three-month highs of around 118.01 per dollar, but closed at 118.97 yen as stock indexes rallied.
The Swiss franc, another low-yielding funding currency, rose about 0.4 percent against the dollar to 1.2038 francs. Gains in US stocks, though, had little impact on the euro. The European currency was up 0.5 percent against the dollar at $1.3694, while sterling was little changed at $2.0246. Sterling strengthened against the dollar, reversing last week's downtrend as expectations for a further interest rate hike remained intact.
On July 31, the yen rose as growing worries about a deterioration in US credit markets pushed stock prices lower and prompted traders to unwind risky trades financed with the Japanese currency. Traders said the yen was inversely tracking the fortunes of stock prices, which fell after mortgage lender American Home Mortgage Investment Corp said it could not fund home loans and may have to liquidate assets.
In late New York trading, the euro was down 0.6 percent at 162.22 yen, while the dollar was down 0.5 per cent at 118.56 yen. The euro was nearly flat at $1.3687 after trading as high as $1.3727. Declines in the dollar versus the euro were limited by data showing US consumer confidence in July rose to a near-six-year high. Sterling strengthened against the dollar, its status as a relatively high-yielding currency drawing buying interest from investors moving back into carry trades. The pound was up 0.3 per cent on the day at $2.03.
On August 1, the dollar rose versus the yen in volatile trading, tracking a sharp rebound in US equities late in the session. Global financial markets have been pounded over the past month by a wave of risk aversion sparked by worries over the state of credit markets world-wide. Troubles started in the high-risk US subprime mortgage sector, and investors fear it may spread and affect credit markets globally.
In late trading, the dollar reversed losses to stand 0.4 percent higher on the day at 118.85 yen, more than a yen above the session low of 117.60, the lowest since April. The euro was up 0.3 per cent buying 162.38 yen. The dollar, however, initially slid against the euro after a report showing the US economy added just 48,000 private sector jobs in July, way below the median forecast of 100,000. The euro was little changed against the dollar at $1.3666. Sterling was up 0.15 percent at $2.0319.
On August 2, the dollar rose against the yen for a second straight day as traders took advantage of a rebound in US blue chip stocks to adjust positions before weekend's payrolls report. The euro and sterling traded higher even as the European Central Bank and the Bank of England left rates on hold at 4 percent and 5.75 percent, respectively.
The dollar was up 0.3 per cent against the yen at 119.16, recovering from four-month lows the previous day. The euro also rose 0.5 per cent to 163.26 yen. The euro hit session highs earlier around $1.3706 after Bundesbank President said fears of a German banking crisis were unfounded following problems at IKB.
Against the Swiss franc, the dollar was little changed at 1.2031 francs.
In New York, the high-yielding New Zealand dollar was up 0.7 per cent at 91.54 yen while the Australian dollar was up 0.4 per cent at 102.20 yen. Sterling steadied against the dollar and euro after the Bank of England kept interest rates on hold at 5.75 per cent, in line with market expectations. So the impact on currency markets was negligible, even though futures reflected a slightly more hawkish outlook for British rates. It had drifted back to being steady on the day against the dollar at $2.0314.
At the close of the week on August 3, the dollar drifted sideways against the yen, holding above a four-month low as traders refrained from taking big positions ahead of a closely watched US payrolls report due later in the day. The euro held its gains against the dollar and the yen after the European Central Bank held interest rates at 4 percent but hinted at a possible rate hike in September. The dollar edged up 0.05 per cent to 119.20 yen from late US trade on August 2.
The euro was up 0.1 per cent against the yen at 163.43 yen, while moving little against the dollar at $1.3703, after rising on expectations for a rate increase the previous session. Sterling steadied against the dollar, the euro and the yen as investors, calmed by a modest recovery in stock markets, stopped unwinding carry trade positions in the high-yielding pound. It was steady at $2.0361.