Dull activity was noticed in the currency market this week. However easing of tensions on the border released pressures on the rupee dollar parity and helped the rupee to gain marginally over the previous week.
In the inter-bank market the rupee opened the week on a dismal note and shed 2 paisa for buying and 3 paisa for selling as dollar buying by some foreign banks on June 10, to cover their immediate requirement pushed the rupee down.
The dollar demand was slightly higher. It traded at Rs60.16 and Rs60.18 at close. Local and foreign banks continued to buy dollars on June 11, pushing the rupee down further against the dollar. The rupee lost another 3 paisa on the second day of the week trading at Rs60.19 and Rs60.20.
However, after shedding 5 paisa, in two days, the rupee managed to recover ground versus the dollar in the following two days. On June 12, both buyers and sellers were in the interbank market.
As a result, demand and supply was in balance. The rupee traded at Rs60.t6 and Rs60.18. Dollar selling by banks on June 13 amid low demand, helped the rupee gain another 4 paisa to trade at Rs60.12 and Rs60.14. No big activity was witnessed in the inter-bank market on June 14, where the rupee ended the week on a positive note, gaining 4 paisa against the dollar. At the close of the week the dollar was seen trading at Rs60.08 and Rs60.10, up 6 paisa over the previous weekend. During the week the rupee recovered 11 paisa in last 3 days trading.
In the kerb the dollar was not in much demand. Easing of tension on the border helped the rupee to recover 15 paisa on June 10, which traded at Rs60.40 and Rs60.50. Less interest in dollar buying on June 10, helped the rupee gain another 10 paisa at Rs60.30 and Rs60.40.
It remained stable on June 12 showing no change against the overnight level and then gained 5 paisa for selling on June 13 to trade at Rs60.30 and Rs60.35, up 25 paisa over the previous weekend level. At the close of the week on June 14, the rupee stayed unchanged.
On the international front the dollar rose on June l O. in lock-step with US stocks, extending gains and shrugging off news US authorities last month averted a radioactive bomb attack against the United States. The euro tested session highs versus the dollar after the US Justice Department said authorities had captured an American al-Qaeda operative who planning to build and explode a radiological dispersion device, known as a dirty bomb. But the single currency pared those gains as traders overcame their jitters. The euro was trading at 94.33 down 0.39 percent from last weekend in New York and below last week’s 17-month high at 94.90 cents. The dollar is getting support from fears the Bank of Japan will intervene to dampen the yen’s export-damaging strength, dealers said. The BoJ has intervened on four days over the past few weeks.
The greenback also rose modestly against the Japanese yen, trading near 124.70 yen with the euro trading near 117.70 yen within view of a 4-month high. The Japanese currency lost ground across the board on lingering fears the Bank of Japan could step into the currency market in order to weaken the unit. Speculators scaled back net long euro positions in the week ended June 4, but long positions still remained near the record highs reached in early May. But dealers also said there was little sign the euro was ready to relinquish its recent supremacy, as market sentiment is still overwhelmingly bearish on the dollar.
The euro backed off against the dollar and yen in Tokyo as dealers unwound heavy long positions after its failure to breach a key resistance point, but its undertone stayed bullish. The single European currency edged to an intraday low of $0.9389 on stop-loss selling after having hit a fresh 17-month high of $0.9490 previous week end, failing to reach $0.95 as US stocks shaved their losses. The euro was finding support around $0.94 as the market was careful about selling it too actively amid caution about how US shares will perform later in the day. In late Tokyo trade the euro stood at 117.42/52 yen with exporters lining up heavy sell orders around 118 yen. Last week, it had hit a four-month high of 117.98 yen.
The dollar rose against the yen as Japan’s repeated yen-selling intervention over the past few weeks has proved effective in setting a firm floor for the US currency. But the greenback was caught in tight ranges by late afternoon, with selling interest strong around 124.80-124.90 yen, while bids were lined -up around 124.50-124.60 yen. The dollar stood at 124.79/85 yen against last week end’s US level of 124.37/45.
Sterling stood close to last week’s 2-1/2 year lows versus the euro in London as the single currency stole a march against the broadly weaker dollar. It has been trapped between movements in euro/dollar in recent weeks, suffering losses against the euro and gaining ground against the dollar as concerns about the US recovery dominated -the market. It stood at 64.78 pence, having tumbled on Friday to 64.91, its lowest since October l999. Against the dollar, it bounced back to $].4625 from $1.4594 in late New York on June 7. The dollar, which lost nearly six percent since April on a trade-weighted basis, erased early gains on June 10 as doubts about the pace of the US recovery still haunted the market. In New York, the dollar gave up early gains versus the euro on June 11, as a Wall Street rally fizzled, opening the door for the European currency to scale fresh 17-month highs in late afternoon dealings. But the greenback held some gains versus the yen, aided by some easing of tensions in South Asia and the euro’s own advance on the Japanese currency. The euro rallied to a new four- and-a-half month high of 118.75 yen, its highest level since January 23. That helped lift the dollar to a three-week high on the yen at 125.80 yen, before the dollar slipped back to 125.19 yen, a gain of 0.35 percent on the day. The euro was up 0.53 percent vs. the dollar, at 94.87 cents after hitting a new 17-month high at 94.95 cents.
Major currencies stayed locked in tight ranges in Asian trading but most traders remained bullish on the euro, saying it was only a matter of time before the single currency regained its upward momentum. The euro last traded at that level 17 months ago, in January 2001. The European currency was at 94.45 cents little changed from the late US level of 94.42. The euro stood at 117.65 yen also steady compared with the late New York’s level of 117.72. The dollar shed some early gains against the yen to trade around 124.57 yen after rising to a high of 124.83 in Tokyo as traders adjusted long positions after an upside test failed due to heavy yen orders by Japanese exporters. The dollar was trading around 124.65 in late US trade.
Sterling ended the day sharply higher versus the euro as upbeat UK output data helped extend early gains made on a newspaper report media mogul Rupert Murdoch might campaign against British entry into the euro. It had risen half a percent to 64.24 pence at one point from late New York levels, its biggest one-day gains since February in percentage terms, against the dollar it had bounced half a cent to $1.4657.
The euro hit a five-month high against the yen and stayed close to its best levels against the dollar in 17-months on June 12 as weaker US share prices and wariness of Japanese intervention encouraged buying of the European currency. The bullish euro climbed as high as 118.98 yen in Tokyo, but faced resistance around 119 where Japanese exporters were showing strong selling interest. The euro was at 118.80193 yen against previous day’s late US level of 118.79 yen. The dollar was at 125.40/45 yen after edging up to an intraday high of 125.60 yen. It rose to a three- week high of 125.78 yen in New York a day earlier. The dollar held above 125 yen before easing off in the face of heavy sell orders from exporters. But its downside was supported thanks to the Bank of Japan, which has intervened to buy dollars for yen for four days since late May.
In New York the dollar fell as far as 95.06 cents per euro overnight, its lowest since mid-January 2001. But the euro, which has run into -trouble just below 95 cents several times in the past few days, failed to make good on the advance after bumping up against options-related sales. The euro soared against the yen overnight, reaching to 119.27 yen for a five-month high before drifting to trade around 119. Dollar/yen was at 125.76, up 0.4 percent on the day The yen was unmoved by the Bank of Japan’s widely expected decision overnight to maintain its loose monetary policy.
Sterling slipped back from an eight month high against the dollar on June 12 as the euro also fell back from a 17-month high against the dollar above $0.95.Meanwhile, the pound was little changed against the euro, trading half a penny above 2-1/2 year lows hit last week. The pound was boosted on June 11 by a newspaper report suggesting Rupert Murdoch - owner of Britain’s biggest-selling newspaper - would campaign against British membership of the single currency.
Sterling was trading at $1.4710 after hitting a high of $1.4755, its highest level since October. It also fetched 64.42 pence per euro compared with a 2-1/2 year low of 64.91 hit last week.
On June 13 the dollar held on to recent gains against the yen and was steady against the euro, supported by a firm US stock market. But the greenback remains vulnerable against the bullish euro and its topside is blocked against the yen by heavy sell orders from Japanese exporters. the euro was little changed at $0.9440/43 against previous day’s late US level of $0.9434/39. It rose to a 17- month high of $0.9507 on June 12 but was pulled back after Wall Street stocks ended in positive territory