MOUNTING demand for dollar in the local currency market kept the rupee under pressure this week.

The rupee witnessed a sharp decline during the week, both in the open and interbank markets, where dollar hit historic highs after breaching Rs93 and Rs92 barriers respectively. It is now heading for new peak. Most analysts fear that if dollar roller coaster ride continues, the rupee is likely to set new records in coming weeks.

The rupee has already depreciated against the dollar by almost seven per cent in little over past ten months. Besides uncertain political situation, widening current account deficit, excessive government borrowings, repayment of IMF loan and proposed cut in next year US aid have added to the pressure on the rupee.

Against the dollar, the rupee hit new lows at Rs92.20 in the interbank market and Rs93.70 in the open market this week. On the interbank market, the rupee commenced the week against dollar on negative note, shedding up to 38 paisa over the previous weekend to trade at Rs91.30 and Rs91.35 in the first trading session.

The rupee further extended its overnight losses on persistent demand for the greenback, which was seen changing hands at Rs91.54 and Rs91.58 after the rupee posted up to 24 paisa decline in the second trading session. Continued downslide in the rupee/dollar parity in the third trading session resulted in 47 paisa decline in the rupee value while dollar climbed at Rs92.0 and Rs92.05.

In the fourth trading session, the rupee crossed Rs92 barrier, hitting new lows versus dollar at Rs92.10 and Rs92.20 on the interbank market, down 10 paisa on the buying counter and 15 paisa on the selling counter. In the fifth trading session, however, the rupee managed to restrict further decline against dollar and rebounded sharply after four straight sessions of losses.

It recovered 30 paisa on the buying counter and 35 paisa on the selling counter before closing the week at Rs91.80 at Rs91.85 on May 25.

The rupee had suffered Rs1.07 loss against the dollar in the first four sessions. However, the rupee recovery in the last trading session reduced losses against dollar on the interbank market to 87 paisa in the week.

In the open market, the dollar was seen on a roller coaster drive against the rupee this week.

Strong dollar demand pushed the rupee to historic lows. As a result of extensive dollar buying this week, it hit another new peak in less than a fortnight. After closing last week at Rs92.00 and Rs92.20, the rupee further shed 10 paisa against the dollar in the first trading session of the week in review, changing hands at Rs92.10 and Rs92.30.

The rupee continued its downtrend versus dollar in the second trading session, losing another 35 paisa to trade at Rs92.45 and Rs92.65. In the third trading session, the dollar hit historic highs against the rupee at Rs93.20 and Rs93.40 after the rupee lost 75 paisa in the session.

The downtrend in the rupee/dollar parity persisted in the fourth trading session. The rupee further lost 10 paisa on the buying counter and 70 paisa on the selling counter, pushing dollar to record high at Rs93.30 and Rs93.70. In the last trading session, the rupee gave up its weeklong weakness and posted 30 paisa gain against the dollar before closing the week at Rs93.00 and Rs 93.40.

This brings cumulative loss in rupee value against dollar in the open market to 100 paisa in the week. Earlier, the rupee losses against dollar had risen to Rs1.30 in the first four trading sessions.

Versus the European single common currency, the rupee in the local currency market traded in narrow band, amid mild fluctuations, as the euro hovered just above its 22-month low against the dollar and remained vulnerable to further declines in the international financial market this week.

The week commenced on a positive note as the rupee extended its weekend firmness in the first trading session, picking up 10 paisa versus euro to trade at Rs117.40 and Rs118.40 as against previous week close of Rs117.50 and Rs118.50.

But in the second trading session, the parity reversed to the previous weekend position and traded at Rs117.50 and Rs118.50 after the rupee posted 10 paisa decline against euro. The rupee continued its downslide for the second day in a row after it sharply lost 30 paisa in the third trading session and traded at Rs117.80 and Rs118.80 against euro.

In the fourth trading session, the rupee recovered 30 paisa versus euro at Rs117.50 and Rs118.50. However, the week ended on a positive note as the rupee managed to gain 70 paisa and traded against euro at Rs116.80 and Rs117.80. Against the euro, the rupee this week managed to recover 70 paisa on week over week basis.

On the international front, the euro edged higher against the US dollar in the New York first trading session and last traded at $1.2817 after rising as high as $1.2824, almost two cents above previous weekend’s low of $1.2640. It has fallen more than three per cent so far this month. The dollar gained 0.4 per cent to 79.31 yen, well above a three-month low around 79.00 set last weekend. In London, sterling was steady against the greenback at $1.5825.

On May 22, the euro slumped one percent against the US dollar at $1.2686, having fallen as low as $1.2656 and edging back down towards last week’s four-month low of $1.2640. The dollar rallied 0.9 percent to 79.99 yen.

The yen has been trading very strongly based on overall uncertainty over the last couple of weeks. In London, sterling fell sharply against the dollar to a session low of $1.5764 from around $1.5832.

On May 23, the euro slumped to its weakest against the dollar in nearly two years at $1.2544, its lowest level since July 2010 and was last down 0.7 per cent at $1.2594. Against the yen, dollar fell 0.7 per cent to 79.47 yen Sterling hit a two-month low against the dollar in London trade, down 0.4 per cent at $1.5703, paring losses after hitting a session low of $1.5677, its lowest since mid-March.

On May 24, the euro dropped at $1.2514, its lowest since July 2010, before recovering to hit session highs at $1.2619. It was last at $1.2523, down 0.5 per cent. The greenback rose 0.2 percent to 79.59 yen, with a session peak at 76.56 yen.

Sterling edged up from a two-month low against the dollar in London, dropping briefly around $1.5648, before paring losses to last trade up 0.2 per cent on the day at $1.5710. Earlier in the session it hit a two-month low of $1.5639.

At the close of the week on May 25, the euro slipped to near two-year lows against the dollar at $1.2511, down 2.1 per cent this week, the worst weekly performance since mid December. It has lost 5.5 per cent against the dollar so far this month.

Against the yen, the dollar was up 0.1 per cent at 79.65 yen. The pound managed to hold above a two-month low against the dollar in London trade, up 0.1 percent at $1.5680, but remained close to a two-month trough of $1.5639 hit a day earlier.