In the local currency market, the rupee is under pressure due to rising demand for dollars by the importers since the past few months.

Political unrest, law and order situation and week economic indicators on the domestic front, while rising international oil prices and slow economic growth in the US are the major contributing factors. As a result, the rupee is showing vulnerability versus the greenback. Currency analysts are of the view, that if the current situation prevails longer, the rupee could suffer sharp depreciation versus the dollar in coming months.

Rising demand for dollar persisted in the inter bank market which pushed the rupee down further on April 7, posting fresh losses of four paisa on the buying counter and another three paisa on the selling counter trading at Rs62.88 and Rs62.90 amid supply of the US currency. The dollar had closed previous week at Rs62.84 and Rs62.87. The dollar continued its advances against the local currency on April 8, when the rupee suffered fresh losses of eight paisa, changing hands versus the dollar at Rs62.96 and Rs62.98.

The rupee finally crossed almost eight week lows of Rs63.10 and 63.13 against the dollar last attained in the inter bank market on February 15. After suffering fresh lows of 22 paisa, the rupee touched new lows at Rs63.18 and Rs63.20 amid rising dollar demand on April 9. However, on April 10, the rupee managed to resist sharp declines against the dollar, as it remained unchanged on the buying counter but shed two paisa on the selling counter, trading at Rs63.18 and Rs63.22.

Higher demand for dollar by importers kept the rupee under pressure on April 11. However, it managed to hold ground versus the dollar and remained unchanged at its overnight level on the buying counter while gaining two paisa on the selling counter to trade at Rs63.18 and Rs63.20. During the week in review, the rupee in the inter bank market suffered losses of 34 paisa against the dollar.

In the open market, the rupee commenced the week on dismal note against the dollar, amid bearish sentiments. It shed 10 paisa against previous week’s Rs63.30 and Rs63.40 and traded at Rs63.40 and Rs63.50 on April 7. On April 8, the rupee further extended its overnight weakness and shed ten paisa to trade at Rs 63.50 and Rs 63.60 on the second trading day of the week in review. It continued its slide against the dollar further losing 10 paisa and changing hands at Rs63.60 and Rs63.70 on April 9.

On April 10, the rupee further extended its decline against the dollar and shed another ten paisa to trade at Rs63.70 and Rs63.80. The rupee slid versus the dollar persisted on April 11, when it suffered further loss of 10 paisa, closing the week at Rs63.80 and Rs63.90. This week, the rupee in the open market lost 50 paisa against the American currency.

Versus the European single common currency, the rupee assumed a fluctuating trend this week. The rupee commenced the week on a positive note as it managed to recover 25 paisa on April 7 when it traded at Rs99.20 and Rs99.30, after closing last week at Rs99.45 and Rs99.55. However, this recovery proved short lived as the rupee suffered a sharp decline of 60 paisa versus the euro which was seen changing hands at Rs99.80 and Rs99.90 on the following day.

On April 9, the rupee again managed to stage a turn around against the euro as it was able to post 20 paisa gain over its overnight rate to trade at Rs99.60 and Rs99.70. But the overnight recovery in the rupee/euro parity was short lived as the rupee suffered a fall of 110 paisa in a single day trading on April 10 to touch new lows after breaking Rs100 barrier. As a result, the European single common currency was seen changing hands against the European common currency at Rs100.50 and Rs100.60,

On April 11, the rupee managed to rebound versus the euro, gaining 45 paisa to trade at Rs100.05 and Rs100.15 at the close of the week. This week, the rupee managed to gain 90 paisa but at the same time it incurred 170 paisa loss against the euro amid fluctuations. On cumulative basis, it suffered a loss of 70 paisa against the European single common currency in the entire week.

In the international financial markets, the week commenced on a firm note as stabilising financial markets raised optimism that the worst of the financial crisis might be over, encouraging some investors to buy riskier assets. The dollar advanced against the yen and euro. The dollar also got some support, as traders were reluctant to buy the euro ahead of the European Central Bank policy meeting and the G7 nations’ gathering late in the week.

The sentiment toward the dollar had improved, but worries about the overall health of the US economy continued to cast a pall over the market, restricting the greenback’s gains. In New York, the euro was down 0.2 percent at $1.5705 on April 7. The dollar gained 0.9 per cent against the yen to 102.42 yen, after earlier spiking to 102.85 yen. Sterling held steady against a trade-weighted basket of currencies, staying in sight of an 11-year low, at the start of a week. It eased versus a broadly firmer dollar, to $1.9896.

On April 8, the US dollar edged lower versus the euro as minutes of the last Federal Reserve meeting showed policy makers felt that a prolonged and severe economic downturn can’t be ruled out. The dollar remained steady against the yen and a basket of currencies on growing views the economic slump in the United States could spill over to other. Reluctance by traders to buy the euro aggressively in the absence of major economic data from both the United States and the euro zone also helped put a cap on any dollar drop, analysts said.

Aggressive monetary easing by the Fed in a bid to prop up the economy following a severe downturn in the housing sector tilted the yield appeal in the euro’s favour and has been the main driver behind the dollar’s sell-off. Since mid-September, the Fed has lowered its benchmark overnight lending rate by three percentage points to 2.25 per cent. The European Central Bank has kept its refinancing rate at four per cent. In New York, the euro was 0.1 per cent higher at $1.5715. Against the yen, the dollar was up 0.1 per cent higher at 102.50 yen. Sterling was the biggest loser of the major currencies, falling nearly one per cent to $1.9693.

On April 9, the dollar fell broadly, as traders snapped up the euro a day ahead of a European Central Bank policy meeting expected to deliver more tough inflation talk and signals the ECB is not ready to cut interest rates. This would be in sharp contrast to the deteriorating economic picture in the United States, where minutes of the Federal Reserve’s March policy-meeting showed that members believed a prolonged and severe economic downturn could not be ruled out. Analysts said the minutes cemented expectations the Fed would lower its benchmark lending rate by at least 25 basis points later this month, further boosting the euro’s yield advantage against the dollar.

The dollar fell to a session low of 101.51 yen and reversed earlier gains that had taken it near a one-month high. It was last trading at 101.77 yen, down 0.8 per cent on the day. Against the Swiss currency, the greenback dropped 1.3 percent to 1.0016 francs. The euro vaulted to a session peak of $1.5864, just shy of a record high of $1.5905 hit last month. In late trading, the euro was last at $1.5821, up 0.8 per cent from previous day’s close and still within the week’s trading ranges. Sterling managed to seek out a small gain versus a broadly weaker dollar, at $1.9736.

On April 10, the US dollar surged from record lows against the euro as European Central Bank President expressed concerns over high inflation, sluggish growth and foreign-exchange volatility. In late trading, the euro was down 0.6 per cent to trade at $1.5741, after surging to an all-time peak of $1.5912 in overnight trade, according to Reuters data. The dollar recouped the bulk of its losses against the yen as US stocks pushed higher, led by tech shares. The dollar last traded down 0.1 per cent at 101.66 yen, after earlier dipping to a session trough of 100.04 yen.

At the close of the week on April 11, the euro inched up against the dollar but stayed well off a record high after European Central Bank President expressed concerns about foreign exchange volatility. The euro stood at $1.5780 up from around $1.5745 in late US trading on April 10 but well off a record peak of $1.5915 hit on electronic trading platform EBS. The dollar rose to around 102.00 yen edging back towards a one-month high of 102.95 yen hit last week. The pound was steady at $1.9707 against a broadly weaker dollar.