DULL trading was witnessed in the local currency market this week, as leading currency dealers remained on the sidelines, amid lack of buying interest in the open market.

Since the past few weeks, traders have adopted a wait-and-see approach, and are eagerly waiting for the formation of the caretaker government ahead of general elections, which are now scheduled for May 11.

The dollar gained against the rupee in the open market, amid low demand. The rupee has depreciated by 36 per cent against the dollar, and by nearly 25 per cent against euro, during the PPP-led government’s five-year tenure.

In interbank dealings, some demand for dollar emerged this week.

Yet the dollar extended its firmness from the weekend, after the rupee suffered a 15 paisa decline on the buying counter, and 17 paisa loss on the selling counter.

This helped the dollar climb to Rs98.10 and Rs98.15 in the first trading session. The dollar had closed last week at Rs97.95 and Rs97.98.

In the second trading session, the rupee continued its downslide and posted a five paisa decline to close at Rs98.15 and Rs98.20.

The rupee continued its downward trend against the dollar on the third consecutive day, due to mounting demand for the US currency in the interbank market.

The rupee posted a five paisa loss against the dollar on the buying counter and another two paisa loss on the selling counter, with the dollar changing hands at Rs98.20 and Rs98.22 in the third trading session.

The rupee marginally fell against the dollar in the fourth trading session, as it went down one paisa to trade at Rs98.21 and Rs98.23.

In the four trading sessions this week, the rupee shed 27 paisa against the dollar in the interbank market.

However, it managed to narrow the spread between the buying and selling rates from five paisa in the first trading session, to two paisa in the fourth session.

Meanwhile in the open market, no major development was witnessed throughout the week.

The dollar was available with foreign currency exchangers at the controlled rate of Rs99.00 and Rs99.25, amid lacklustre trading.

The spread of 25 paisa between buying and selling rates for the dollar has been in place since the past six weeks in the open market. However, the dollar rate in the interbank market is still 1.04 per cent lower than in the open market.

But there are reports that the dollar in the black is changing hands at slightly above Rs100.

The European single common currency, on the other hand, has showed a declining trend against the rupee in the past few weeks, after it had hit its all time high against the rupee, to trade above Rs136 in the first week of this February.

But since then, it has assumed a downtrend, amid modest fluctuations.

The rupee rebounded sharply against the common currency and gained throughout the week.

In the first trading session, the euro was changing hands at Rs129.00 and Rs129.25, after the rupee managed to pickup 100 paisa from the previous weekend’s close of Rs130.00 and Rs130.25.

In the second trading session, the rupee traded unchanged at Rs129.00 and Rs129.25, while the euro plunged near its three-month low against the dollar in international financial markets.

The rupee continued its upward journey against the euro in the third trading session, as it posted a 75 paisa gain before hitting an almost eight-week high of Rs128.25 and Rs128.50.

The rupee remained flat against the common currency in the fourth trading session, as it traded unchanged at overnight levels of Rs128.25 and Rs128.50.

During the week in review, so far in the four trading sessions, the rupee managed to gain a total of Rs1.75 against the euro.

On the international front, the common currency tumbled below its previous three-month low against the dollar in New York in the first trading session of the week, after a plan to tax bank deposits in Cyprus, as part of an European Union (EU) bailout deal, sparked fears about the eurozone’s larger troubled economies.

Meanwhile, on the Reuters platform, the dollar/yen low was 94.03. It later recovered all the losses to trade at 95.26 yen, little changed on the day.

This was a more than one yen lower from a three and a half year peak of 96.71 yen on March 12. In London, sterling was steady at $1.5112, below a peak of $1.5177 it had reached last weekend.

On March 19, the euro dropped to near a four-month low against the dollar, and looked poised to extend the losses as uncertainty about Cyprus reignited fears about the future of the common currency.

It fell to as low as $1.2843, its lowest level since November 22, and was last down 0.5 per cent at $1.2894 for the day. Against the yen, the dollar lost 0.2 per cent to trade at 95.07 yen.

Sterling was up 0.1 per cent at $1.5115 in London trade. Options markets showed investors increasingly betting on further sterling weakness.

On March 20, the dollar rallied against the yen, after a decision by the US Federal Reserve to continue its aggressive monetary easing fuelled optimism about the US economic recovery.

The dollar rose to a high of 96.03 yen, and last traded at 95.91 yen, up 0.8 per cent on the day. The euro also rebounded from its four-month low against the dollar, as immediate fears about a financial meltdown in Cyprus eased.

It rose 0.5 per cent to $1.2947. In London, sterling hit a two-week high against the dollar, after Britain’s finance minister did not use his budget to give as much leeway to the Bank of England to stimulate growth as some market players had anticipated.

The pound rose to a peak of $1.5187, its highest since early March, before paring gains to last trade up 0.4 per cent on the day at $1.5163. However, strategists are of the opinion that sterling’s bounce could be short-lived.

On March 22, the euro dropped across the board on further evidence of a deepening eurozone slowdown, and worries about a banking collapse in Cyprus.

It fell to a session low of $1.2879, and was last at $1.2913, down 0.2 per cent on the day.

Meanwhile, the dollar itself was down 0.8 per cent to trade at 95.25 yen, with Asian central banks looking to buy the dollar at dips.

Sterling rose against the dollar, and was last up 0.5 per cent for the day at $1.5170, pulling back slightly from the $1.5210 it had hit earlier, its highest since February 28.