In the local currency market, the rupee showed mixed sentiments against the dollar and euro during the second week of the year 2013.
The new-year remains clouded with fears and challenges. After losing nearly eight per cent against the dollar in 2012, the rupee in 2013 is forecast to hit Rs100. It has already approached Rs99 in the first fortnight of the year.
The situation at the economic as well as political fronts is not very positive. Political unrest, poor law and order, bad governance, gas load-shedding and power shut-down have adversely effected trade, industrial and business activities and restricted domestic and foreign investments, resulting in capital outflows.
Rising imports, widening trade deficit, mounting external debts, increasing fiscal gap, heavy government borrowings and declining revenues, all also exerting downward pressure on the foreign exchange reserves which are currently hovering around $13bn to $14bn. This has given free ride to dollar. The rupee has already depreciated by 1.2 per cent against the dollar in the first two weeks of the new-year. This week on the interbank market, the rupee/dollar parity escalated both ways in narrow ranges. Against the dollar, the rupee hit the lows at Rs97.45/48 and the highs at Rs97.30/33 during the week.
However, the rupee this week showed slight improvement against the dollar over last weekend. The week commenced on a happy note as the rupee gave up its weekend’s weakness against the dollar and picked up nine paisa on the buying counter and 10 paisa on the selling counter at Rs97.41 and Rs97.45 in the first trading session, up 0.09 per cent from last week close at Rs97.50 and Rs97.55. The rupee failed to hold overnight firmness against the dollar in the second trading session, posting four paisa loss on the buying counter and three paisa loss on the selling counter to trade at the week’s lowest levels at Rs97.45 and Rs97.48.
The rupee quickly managed to rebound against the dollar in the third trading session and picked up 15 paisa on the buying counter and rose by 14 paisa on the selling counter. The dollar was last trading at Rs97.30 and Rs97.34 on the day, down 0.14 per cent over the previous day close. In the fourth trading session, the rupee managed to retain its overnight level against the dollar on the buying counter, while inching up by one paisa on the selling counter to hit the week’s highest levels at Rs97.30 and Rs97.33 in the four trading sessions. In the last trading session, the rupee retained its overnight levels on the buying counter for the third day in a row and picked up one paisa on the selling counter to close the week against the dollar at Rs97.30 and Rs97.32. On week over week basis, the rupee in the interbank dealings however managed to gain 0.23 paisa over dollar this week.
In the open market, the rupee this week hit Rs99 against the dollar. It is now slowly and steadily seems heading towards Rs100 psychological barrier. This week, the dollar remained traded in a narrow band between Rs98.50/80 and Rs98/99. The week commenced on a negative note with the rupee shedding 15 paisa and dollar climbing to Rs98.55 and Rs98.75 in the first trading session. The rupee was down 0.15 per cent against last week close at Rs98.40 and Rs98.60. In the second trading session, the rupee posted a slight gain of five paisa which pushed dollar slightly lower by 0.05 per cent to Rs98.50 and Rs98.70.
The parity traded unchanged at Rs98.50 and Rs98.70 for the second straight day in the third trading session. In the fourth trading session, the rupee failed to retain its overnight level versus the dollar and posted 20 paisa decline which pushed dollar to the week’s highest levels at Rs98.70 and Rs98.90, up 0.2 per cent. Massive dollar buying was seen in the fifth trading session.Strong buying of dollars by importers ahead of the weekend resulted in 10 paisa loss in the rupee value during the week’s closing session. Finally, the dollar captured another historic peak against the rupee and closed the week at Rs98.80 and Rs99.00. This resulted in 0.4 per cent depreciation of the rupee against dollar in the open market this week.
Versus the European single common currency, the rupee this week showed a fluctuating trend. It traded between Rs128 and Rs131 band after commencing the week on a steady note. It did not show any change in the first trading session when euro was seen changing hands at the previous week-end levels at Rs128.00 and Rs129.00. It, however, posted a sharp loss of 80 paisa in the second trading session, enabling euro to climb to the week’s second highest levels at Rs128.80 and Rs129.80, down 0.62 per cent over the preceding session. The rupee in the third trading session, managed to recover 40 paisa to trade against the euro at Rs128.40 and Rs129.40.
In the fourth trading session, the rupee again drifted lower in terms of the euro, slipping by 30 paisa at Rs128.70 and Rs129.70, down 0.2 per cent from previous day close. Finally the week ended on a negative note with the euro hitting the year’s highs and the rupee slipping to all-time lows at Rs130.00 and Rs131.00. The rupee suffered the week’s sharpest decline of Rs1.30 in single day trading of the last session. During the week in review, the rupee on cumulative basis suffered Rs2 decline, depreciating against the European single common currency by 1.5 per cent over the previous week close.
On the international front, the euro rose for a second straight session and last traded at $1.3108 against the dollar in New York first session, up 0.3 per cent on the day. The dollar, meanwhile, retreated from a two-and-a-half-year high against the Japanese yen, down 0.4 per cent at 87.78 yen, off previous weekend peak of 88.40 yen, its strongest since July 2010. In London, sterling steadied against the dollar and last traded at $1.6066, holding above a 3-1/2 week low of $1.6010 hit last weekend.
On January 8, the euro fell against the dollar for the first time in three sessions, down 0.2 per cent at $1.3084. Against the yen, the dollar was down 0.7 per cent at 87.18 yen. Sterling was down 0.4 per cent at $1.6041, its lowest in nearly a month, staying well below last week's 16-month high of $1.6380. But on January 9, the dollar rallied against the yen, moving back towards a recent two-and-a-half-year high at 87.78 yen, up 0.9 per cent. The euro last traded 0.1 per cent lower against the dollar at $1.3064. Sterling fell to a near six-week low against the dollar, down 0.3 per cent at $1.5996, its lowest level since late November.
On January 10, the euro rose for the first time in three sessions against the dollar, up 1.4 per cent at $1.3248 after hitting a session peak of $1.3266, its highest since January 2. The dollar rose for a second straight session, up 0.4 per cent at 88.24 yen.Sterling rose against the dollar to $1.6096 from around $1.6056. At the close of the week on January 11, the euro climbed to its highest against the dollar since April 2012, rising as high as $1.3365 and last traded at $1.3351.