An upward trend in the rupee-dollar parity was noticed in the inter-bank market this week. The rupee shrugged off its previous weekend's bearish trend versus the dollar on the opening day , gaining three paisas for buying and two paisas for selling to trade at Rs57.45 and Rs57.47 on January 12.
Low demand for the dollar boosted the rupee in local markets. Business transaction was comparatively low, as the Japanese markets remained closed for a public holiday.
On January 13, the rupee did not show any significant change against the dollar, trading at Rs57.44 and Rs57.45, up one paisa for buying and two paisas for selling against its overnight level. Balanced demand and supply of dollars encouraged the local currency to sustain its prevailing levels.
The rupee recovered slightly in terms of dollar, gaining two paisas and traded at Rs57.42 and Rs57.44, on January 14. It picked up another three paisas in relation to the dollar on January 15, to change hands at Rs57.39 and Rs57.40 amid comparatively low demand by the banks.
On January 16, the balanced demand and supply of dollars enabled the rupee to maintain its overnight levels in interbank market with the dollar changing hands at Rs57.38 and Rs57.40. The rupee thus appreciated by seven paisas over the dollar this week in the interbank market.
In kerb dealings, the rupee assumed a falling trend versus the dollar and shed two paisas to trade at Rs57.50 and Rs57.55, on January 12. The rupee continued its weakness versus dollar and shed another three paisas changing hands at Rs57.53 and Rs57.58 on January 13.
On January 14, the rupee came under renewed pressure and lost four paisas versus the dollar trading at Rs57.57 and Rs57.62, due to an increase in demand for dollars. Banks' increased demand for dollar for heavy payments pushed the greenback value up in the open market.
On January 15, the rupee, however, managed to recover four paisas versus the dollar in the kerb market and was traded at Rs57.53 and Rs57.58. The rupee posted fresh gain on the falling demand of dollars by the interbank market after huge payments. The rupee reversed its gaining trend against dollar, losing two paisas at Rs57.55 and Rs57.60 on January 16. Over the previous week's close, the rupee lost five paisas against the dollar in the kerb this week.
The euro touched the new high at Rs74 after gaining 35 paisas in the kerb market on January 12, changing hands at Rs73.90 and Rs74.20. The basic factor of euro's surge was the ECB's unchanged monetary policy and dollar's continued fall in the world markets.
The single European currency has gained handsome ground on local investors' increasing interest in the euro, after losing their confidence over the slashing interest rates of saving schemes and bank deposits.
The rupee on January 13, recovered 55 paisas versus the euro to trade at Rs73.35 and Rs73.65. The local currency managed to gain as the single European currency fell in terms of dollar following the European Central Bank president's warning that the fall of the greenback was 'brutal' and not appropriate.
On January 14, the rupee recovered 55 paisas more against the euro to settle at Rs72.80 and Rs73.10, as investors started selling the single European currency to gain higher profit.
The rupee further gained five paisas versus the euro to change hands at Rs72.75 and Rs73.05 on January 15. The Greenspan's comment and profit-taking in euros trade pushed the euro value sharply down in world markets. The euro came under pressure versus the major currencies due to the European Central Bank's concern at the rising single European currency.
Against the euro, the rupee recovered 85 paisas and traded at Rs71.85 and Rs72.15, on January 16. Profit-taking in the single European currency trade and its sliding value in world markets helped the rupee gain some strength versus the euro in kerb market. The rupee, however, managed to stage a sharp recovery over the European single currency in the week gaining Rs2.05 against the euro.
On international front, the dollar rose against its European rivals on the week's opening day on the European Central Bank President's comment that the world's top central bankers were concerned about the excessive currency moves.
The statement helped send the euro more than 1-1/2 cents lower against the dollar. Traders said following the last week's bad December US employment report, the market was poised to take some profits on the dollar's recent drubbing, and the comment smoothed the way.
In the late New York trade, the euro fell to a low of $1.2738 after touching a record high of $1.2898, on January 12. This marks the seventh record-setting session for the euro in the past 10 days. Sterling first rose to $1.8577, its highest level since September 1992, before succumbing to the dollar's broad-based rebound, ending the day at $1.8463, a loss of 0.14 per cent.
Sterling stormed to its highest level against the dollar in more than 11 years but pared gains after the European Central Bank chief expressed concern about the "brutal" foreign exchange moves. In early trade, the pound leapt as high as $1.8577 in London - its strongest since the Britain's exit from the Europe's Exchange Rate Mechanism in September 1992 - as the dollar extended its downward spiral after last weekend's disappointing US jobs report.
On January 13, the dollar steadied against the euro recovering from the preceding day's record low after concern about the impact a soaring euro may have on the economic growth. The dollar steadied around $1.2743 against the euro in afternoon New York trade.
Against the yen, the dollar was down 0.43 per cent on the day to 106.23 yen, confined to a narrow trading range by the market's nervousness that the Japanese authorities could intervene again to curb yen gains.
Against the Swiss franc the dollar was at 1.2227 francs, down about 0.44 per cent on the day. The pound was down about 0.21 per cent to $1.8430. Sterling briefly fell versus the dollar and the euro following disappointing news about the UK manufacturing, but regained ground later as investors bet that the British interest rates would still go up.
The dollar rose on January 14, after the November US trade gap narrowed unexpectedly, overshadowing a benign December inflation report that suggested the US interest rates will remain low for some time. Report from the Federal Reserve suggested the US economic recovery continued in December and into early January.
The report added momentum to the dollar buying created by a flurry of concerned comments from the European policy-makers in the past three days about the euro's rapid record-breaking rise. It fell further from the weeks opening's record high of $1.2898 to trade at $1.2648, a loss of 0.89 per cent from the previous day's New York close.
The greenback also rose 0.94 per cent against the Swiss franc to 1.2338 francs after falling to a 7-year low on January 12. The US currency also surged more than one per cent against the Canadian dollar to C$1.2893. The dollar was nearly unchanged against the Japanese currency, trading at 106.23 yen, after falling to a low of 105.95, just above a 3-year low set a week ago. The dollar's relative stability against the Japanese currency is largely due to market wariness the Bank of Japan could step in to curb the yen's export-damaging gains at any moment.