The currency market experienced a disturbed week as trading activities came to a standstill after city life was completely paralysed for four days, due to protests over the killings in Quetta and Karachi.

Banking industry operations in the city were also badly affected by the strike, but remained partially operated. As a result, easier trend was observed in the currency market this week. While the rupee/dollar parity did not show any visible change and traded almost flat at previous weekend levels in the open market, it restricted dollar rise in the interbank dealings amid dull trading.

Analysts are of the view that the rupee’s current firmness against the dollar is temporary. As Pakistan economy will continue to remain under pressure due to political uncertainty, growing unrest, deteriorating law and order situation and rising fear of unpredictable government policies ahead of forthcoming elections, the rupee is expected to come under renewed pressure against the dollar in coming months. On the interbank market this week, the rupee traded at Rs98.14 and Rs98.16 against the dollar in the first trading session, down four-paisa from last weekend’s Rs98.10 and Rs98.12. It further lost eight paisa in the second trading session with the dollar changing hands at Rs98.22 and Rs98.24.

After losing eight paisa against the dollar in the first two sessions, the rupee assumed upward rising trend amid thin trading. In the third trading session, the rupee recovered 10 paisa on the buying counter and eight paisa on the selling counter to trade at Rs98.12 and Rs98.16. It further extended its overnight firmness for the second straight day and posted fresh gain of seven paisa, pushing dollar to the week’s lowest levels at Rs98.05 and Rs98.09 in the fourth trading session. Finally in the last trading session, the rupee gave up overnight gains in relation to the dollar, losing 11 paisa on the buying counter and another nine paisa on the selling counter. It closed the week at Rs98.16 and Rs98.18. However, the dollar rise in the interbank market in rupee term was restricted to six paisa this week.

In the open market, business and trading activities were adversely affected this week due to unrest in the city. Strike calls kept all activities almost suspended for four days. The rupee this week held the weekend level versus the dollar unchanged on the buying counter in all the five trading sessions while it picked up five paisa on the selling counter in the first trading session, changing hands at Rs99.00 and Rs99.20 against last weekend’s Rs99.00 and Rs99.25. In the second trading session, the rupee on the selling counter revert back to the weekend’s level after posting five-paisa loss versus dollar and remained traded at Rs99.00 and Rs99.25 in the last three trading sessions.

Against the European single common currency, the rupee commenced the week on a positive note, picking up 10 paisa in the first trading session at Rs132.40 and Rs132.65. It, however, reverted to the weekend’s levels in the second trading session after dropping 10 paisa at Rs132.50 and Rs132.75 on the day. It sharply extended overnight losses versus euro and hit the week’s lowest levels at Rs133.25 and Rs133.50, shedding 75 paisa in the third trading session. In the fourth trading session, the rupee posted fresh gain of Rs1.25 in single day trade and was last changing hands at Rs132.00 and Rs132.25. The week ended on a positive note as the rupee picked up 50 paisa in the last trading session before hitting the week’s highest at Rs131.50 and Rs131.75. During the week, there was a net gain of 100 paisa in rupee value against euro.

On the international front, with US markets closed for President's Day on February 18, the euro dipped 0.2 per cent to $1.3334 in Asian first trading session, though it has support near $1.3310, the 38.2 per cent retracement level of its November-February rally, where it rebounded last weekend. The dollar rose 0.5 per cent to 93.98 yen, having bounced smartly from a low near 92.20 yen on February 15. In London, sterling hit a seven-month low against the dollar, dropping to $1.5438, its lowest since July 13, before recovering to last trade down 0.3 per cent on the day at $1.5472.

On February 19, the euro rose 0.3 per cent to $1.3391, moving further away from a three-week low of $1.3306 hit last weekend. Against the yen, the dollar fell 0.4 per cent to 93.53 yen. It was well below a peak of 94.22 that yen hit a day earlier. Some analysts see further short-term losses in the dollar against the yen. In London, sterling fell to a seven-month low against the dollar on Tuesday, slipping to $1.5426, off a session high of $1.5505 and its weakest level since mid-July.

On February 20, the dollar jumped to a four-week high against the euro and rose versus the yen.

The euro fell 0.8 per cent to $1.3278, having dropped as low as $1.3273 on Reuters data, the lowest since January 23 while the dollar rose 0.2 per cent to 93.69 yen. In London, sterling fell nearly one per cent against the dollar, hitting a near eight-month low of $1.5281.

On February 21, the euro dropped to a six-week low against the dollar to $1.3160, its lowest since January 10, and well below a 15-month peak of $1.3711 reached on February 1. It last traded at $1.3182, down 0.7 per cent. Against the yen, the dollar fell 0.5 per cent to 93.04 yen. The yen has been the worst performing major currency so far in 2013. Sterling gained in London, up 0.1 per cent against the dollar at $1.5251, well above a two-and-a-half year low of $1.5130 hit earlier in the day.

At the close of the week on February 22, the euro fell as low as $1.3144, its lowest since January 10 and was last down 0.2 per cent at $1.3167. The dollar rose 0.3 per cent on the day to 93.34 yen, keeping some distance from a 33-month high of 94.47 yen hit last week. In London, sterling pulled away from a two-and-a-half year low against the dollar last traded up 0.1 per cent at $1.5273 after falling to as low as $1.5130 on February 21, its weakest since mid-July 2010.