However, the central banks measures announced after the rupee/dollar parity touched its weakest levels and crossed Rs74 barriers in the first week of July have since then resisted any sharp decline in rupee value. This week, the rupee remained escalated between Rs70 and Rs72 range, while it continued to slip versus European single common currency.
Bearish sentiment was again witnessed on the interbank market on the opening day of the week, as the rupee continued its sharp amid higher demand for dollars. It shed 45 paisa on the buying counter and another 38 paisa on the selling counter, changing hands versus the dollar Rs70.95 and Rs70.98 on July 21, after closing last week at Rs70.50 and Rs70.60. On July 22, however, the rupee managed to show strength over dollar, gaining five paisa to trade at Rs70.90 and Rs70.93.
The rupee extended its overnight firmness over the dollar on the third trading day of the week in review and gained five paisa for buying and three paisa for selling to trade at Rs70.85 and Rs70.90 on July 23. The dollar demand by the importers existed through out the day but improved dollar supply helped the local currency to hold its strength versus dollar. The dollar demand persisted on July 24 due to higher payments. Consequently, the rupee extended its weakness falling further by five paisa and traded against the dollar at Rs70.90 and Rs70.95.
On July 25, the rupee/dollar parity in the inter bank market stood unchanged at its overnight levels as rupee firmness against the dollar prevailed in the market. The dollar continued to trade at Rs70.90 and Rs70.95 for the second day in a row. However, during the week in review, the rupee in the inter bank market was lower against the dollar on cumulative basis by 40 paisa on the buying counter and 35 paisa on the selling counter.
In the open market, the rupee posted a sharp fall of 90 paisa on the buying counter and 75 paisa on the selling counter to trade at Rs71.70 and Rs72.05 against dollar on the opening day of the week. The rupee had closed last week at Rs70.80 and Rs71.30. The weakness in the rupee/dollar parity persisted on July 22, when the rupee further lost 30 paisa for buying and 25 paisa for selling to trade at Rs72.00 and Rs72.30 against the dollar. On July 23, the rupee staged a rebound against the dollar recovering 20 paisa on the buying counter and another 10 paisa on the selling counter. The dollar was seen changing hands at Rs71.80 and Rs72.20.
The rupee/dollar parity maintained its overnight levels on July 24, with the dollar trading unchanged at Rs71.80 and Rs72.20. However, the rupee failed to maintain its overnight levels against dollar on July 25 and shed 30 paisa on buying and 10 paisa on selling, changing hands at Rs72.10 and Rs72.30 at the close of the week. This week, the rupee lost 130 paisa on the buying counter and 100 paisa on the selling counter against the dollar in the open market.
Versus the European single common currency, the rupee continued its weakness, further losing 95 paisa on buying and 105 paisa on selling to trade at Rs112.35 and Rs112.55 on the first trading day of the week after having traded at Rs111.30 and Rs111.50 last week end. It posted fresh losses of 110 paisa on buying counter and another 100 paisa on selling counter, changing hands at Rs113.25 and Rs113.45 on the second trading day.
However, the rupee managed to recover its strength over the euro on the third trading day of the week in review, as it managed to gain 110 paisa on buying and 105 paisa on selling. The euro traded against the rupee at Rs112.35 and Rs112.50 during the day.
The rupee further extended its gains picking up 75 paisa for buying and 70 paisa for selling and traded against the euro at Rs111.60 and Rs111.80 on the fourth trading day. The rupee decline versus euro persisted on the fifth trading day, when it further lost 45 paisa for buying and 40 paisa for selling to trade at Rs112.05 and Rs112.20, bringing cumulative fall in the rupee value to 75 paisa against the European single common currency this week.
On the international front, the dollar fell on the opening day of the week, as fears of woes in the US financial sector persisted even as Bank of America reported better-than-expected results. The greenback gained earlier against the yen after Bank of America’s second-quarter earnings beat analysts’ forecast. It regained some strength last week after confidence in the US financial sector, hit hard by the nearly year-old credit crunch, and was boosted somewhat following better-than-expected results from Citigroup, J.P. Morgan Chase and Wells Fargo.
In late New York trading, the euro was last up 0.3 per cent to $1.5898 on July 21, below last week’s record high of $1.6037 according to Reuters. Against the yen, the dollar slipped 0.2 per cent to 106.69 yen. Sterling dipped versus the dollar in London as more bad news on the financial sector and property market deepened Britain’s economic gloom. British bank HBOS Plc said shareholders subscribed for just 8.3 per cent of shares in its rights issue, leaving its underwriters to try to sell almost 3.8 billion pounds of stock. The pound was down 0.1 per cent at $1.9962.
On July 22, the dollar boosted by a steep drop in oil prices and comments from a Federal Reserve official suggesting that US interest rates may have to rise even before financial markets recover.
Crude-oil futures last traded down $4.92, or 3.7 per cent, at $126.17 a barrel. That boosted the dollar across the board, with the United States benefiting from lower crude prices because it is a heavy consumer of oil. In New York, the euro tumbled 0.8 percent to $1.5796, well below its record high of $1.6037 set last week.
Sterling slipped around 0.2 per cent to the day’s low of $1.9992. The pound had climbed earlier to $2.0075 and stayed in range of a near four-month high touched last week.
On July 23, the dollar rallied to a one-month peak against the yen and a two-week high against the euro supported by a further drop in oil prices and improved confidence in the US financial sector. Oil prices, which are trading more than $20 below this month’s record peak of $147.27, continued their decline following the release of US crude inventory data, giving the greenback a generally bid tone.
In New York, the dollar climbed to its highest level in a month at 107.97 yen, according to Reuters data, before easing back to 107.88 yen, still up 0.4 per cent.
The euro had fallen as low as $1.5671, its weakest level since July 9 and more than three US cents below last week’s record high of $1.6037. It last traded at $1.5688, down 0.6 percent on the day. Adding to the euro’s downside was data showing euro zone new industrial orders fell more sharply than expected. The dollar rose to a one-month high of 1.0400 against the safe-haven Swiss franc. The greenback also continued to benefit from Philadelphia Federal Reserve President’s comments that the US central bank may have to raise interest rates sooner rather than later to combat inflation. Sterling rose more than half a percent to a session high of $2.0025.
On July 24, the dollar fell against the yen, dragged down by disappointing news in the US housing sector and steep losses on Wall Street.
However, the greenback was slightly higher against the euro, which came under pressure as soft data cooled expectations of higher euro-zone interest rates.
In late trading in New York, the euro fell 0.1 per cent on the day to $1.5672, well below its record high of $1.6037 set last week. Against the yen, the dollar dropped 0.6 per cent to 107.30. Sterling fell to a two-week low of $1.9817, before recovering slightly to stand 0.7 per cent down on the day at $1.9845.
At the close of the week on July 25, the dollar dropped against the yen, extending falls from a one-month high hit the previous day on disappointing news on the US housing sector and steep losses on Wall Street.
In Tokyo, it fell 0.5 per cent against the yen from late US trade a day earlier to 106.80 yen, dropping further from a one-month high of 107.99 yen hit the previous day.
The euro rose 0.2 per cent to $1.5699. In London, the pound was broadly steady at $1.9876. Sterling hit a two-week low on July 24 after retail sales slumped 3.9 per cent in June, the sharpest monthly fall since the series began in 1986.