Mixed sentiments emerged in the local currency market towards the close of the year with the rupee showing some bullish moves against major currencies this week.

Both, the dollar and euro remained volatile in relation to the rupee in 2012.

During the year, both these currencies hit all time high against the rupee. In the 12 months to December 2012, the rupee has depreciated by Rs7.70 against the dollar and by Rs12.73 versus euro. However, the central bank intervention in the last week saved the rupee from free fall against the dollar which had already crossed Rs99 mark and heading towards Rs100 psychological barrier.

This week, the rupee regained firm ground versus dollar and euro. It opened the week unchanged against the dollar on the interbank market on December 24 as it traded flat at Rs97.50 and Rs97.55 in the first trading session.

The market was closed on December 25 on account of Jinnah’s birth anniversary. In the second trading session, the rupee rebounded against the dollar, posting fresh gains of 25-paisa on the buying counter and 21-paisa on the selling counter that pushed dollar to Rs97.30 and Rs97.34. However, the rupee failed to hold overnight firmness in the third trading session when it drifted lower against the dollar, slipping by 34-paisa at Rs97.64 and Rs97.68. It managed to recover 44-paisa on the buying counter and 43-paisa on the selling counter in the last trading session before closing the week against the dollar at Rs97.20 and Rs97.25. During the week in review, the rupee showed 30 paisa gain against the dollar in the interbank market. It still suffered 77-paisa loss in the month.

In the open market, the rupee this week entered a mild recovery phase after hitting historic lows against the dollar last week. This week, the rupee/dollar parity showed bullish trend. The rupee, however, commenced the week on a negative note, shedding 10 paisa against the dollar. Due to short dollar supplies on account of Christmas holidays in Europe and thin US trading, the dollar climbed in the local market and was last changing hands at Rs98.00 and Rs98.20 in the first trading session as against previous week close of Rs97.90 and Rs98.10.

The market re-opened on a positive note on December 26 on easing of dollar supplies. The rupee posted 20-paisa gain against the dollar in the second trading session at Rs97.80 and Rs98.00. The parity did not show any change and traded at its overnight level in the third trading session. The rupee picked up 10 paisa in the last trading session, closing the week against the dollar atRs97.70 and Rs97.90 on December 28. This week, the dollar in the open market suffered 20 paisa fall against the rupee. The rupee was, however, down nearly 0.7percent against the dollar on month-over-month basis.

Versus the euro, the rupee staged a mild recovery early this week. Later in the week, however, it hit Rs130. It traded almost flat at Rs128.56 and Rs129.60 in the first trading session, inching up by five-paisa on the buying counter while remaining unchanged on the selling counter. The euro closed last week at Rs128.60 and Rs129.60. The rupee further inched up by ten-paisa and traded against euro at Rs128.50 and Rs129.50 in the second trading session.

The euro rebounded sharply in the third trading session, picking up 50 paisa and hitting the week’s highest level at Rs129.00 and Rs130.00 in relation to the rupee. After shedding 60 paisa in the previous two sessions, the rupee managed to post a 70 paisa gain versus the euro in the fourth trading session. The rupee thus ended the week on a positive note with euro trading at Rs128.30 and Rs129.30, its lowest level in the four trading sessions. On week-over-week basis, however, the rupee was up 0.23 per cent against the euro this week but down 2.9 per cent over the month. Last week, the rupee had crossed Rs130 barrier.

On the international front, the dollar skidded in thin trading in New York first trading. The euro was up 0.2 per cent on the day at $1.3212.

It hit an eight-month high of $1.33085 on December 19. Against the yen, the dollar was up 0.6 per cent on the day at 84.68 yen, trading near a 20-month low against the dollar. Sterling was flat at $1.6180, having earlier risen past $1.6200 helped by buying by semi-sovereign investors in early London trade.

On December 25, trading volume was light with many trading centres closed for Christmas holidays. In Asian trade, the euro traded at $1.3181, down from its 7 1/2-month high of $1.33085 hit last week, but little changed on the day.

Against the yen, the dollar rose as high as 84.965 yen, its peak since April 2011, before giving up gains to last stand at 84.84 yen. It hit a 20-month low against the dollar on expectations that the new Japanese government will push the BoJ into more aggressive monetary easing.

On December 26, only Japanese and US markets were open. Against the dollar, the euro rose 0.3 per cent to $1.3222. Its gain was due to position adjustments going into the end of the year. The yen tumbled to a more than two-year low against the dollar which rose as high as 85.70 yen on Reuters data, its strongest level since mid-September 2010. It last stood at 85.61 yen, up one per cent on the day.

On December 27, the yen dropped to its lowest in more than two years on expectations of bold monetary stimulus in Japan as dollar rose to 86.15 yen, its highest since mid-August 2010. It was last up 0.5 per cent at 86.02 yen. It has risen 12 per cent against the yen in 2012. At the same time, the greenback slipped against the euro and traded at $1.3216, down slightly for the day and below an eight-month high of $1.3308 hit last week. The euro was last up 0.2 per cent to $1.3242. Sterling was last up 0.2 per cent at $1.6160.

At the close of the week on December 28, the euro edged lower against the dollar, down 0.1 per cent on the day at $1.3221, having slipped to a session low of $1.3164.

It has gained across the board this month, hitting an eight-month high against the dollar. In 2012, the euro has gained nearly two per cent against the dollar. The dollar was steady against the yen at 86.11 yen, edging away from a peak of 86.64 yen, its strongest since August 2010. Against the dollar, sterling was higher on the day at $1.6130.