THE rupee dropped against the dollar in both the interbank and open markets last week, while some hectic trading was witnessed as demand for the reserve currency picked up ahead of the long Eid holidays.

However, the rupee managed to restrict its decline as dollar supplies were also said to have picked up, with overseas Pakistanis remitting large sums to their families for Eid spending.

On the interbank market, the rupee commenced last week by marginally shedding two paisas for buying and three paisas for selling, as increased dollar demand from importers weighed on the local currency in the first trading session. The strengthening of the greenback against major currencies in the overseas market was also said to have impacted the rupee.

The dollar appreciated by two paisas against the rupee in interbank dealings and by 15 paisas in the open market in three trading sessions last week

As a result, the dollar inched up slightly to trade at Rs101.72and Rs101.74 in the opening session, against the prior week’s close of Rs101.70 and Rs101.71.

Continuing its downslide versus dollar, the rupee lost another two paisas for buying and one-paisa for selling counter in the second trading session, as the reserve currency last changed hands at Rs101.74 and Rs101.75 on the day.

But the local currency managed to regain two paisas in the third trading session. As a result, the dollar closed trading on Wednesday at Rs101.72 and Rs101.73 — up a net two paisas against the rupee in three trading sessions.

In the open market, a rise in demand for the reserve currency weighed down on the rupee. However, the local currency had started last week on a positive note, gaining 15 paisas to send the dollar down at Rs102.70 and Rs102.90 in the first trading session, against the prior week’s closing level of Rs102.85 and Rs103.05.

But the rupee gave up the momentum in the second trading session as it shed 10 paisas, allowing the greenback to rise to Rs102.80 and Rs103.00 for the day.

The rupee extended its overnight losses against the dollar in the third trading session, as it lost another 20 paisas. As a result, the dollar closed Wednesday at Rs103.00 and Rs103.20 — up a net 15 paisas against the local currency in three trading sessions.

The rupee displayed a much stronger performance against the euro last week, after some doubts were raised about the local currency’s relative weakness against the single currency over the past two weeks despite the unfolding Greece crisis, which has led to the euro declining against major currencies recently.

The rupee commenced the week by gaining 100 paisas, sending the single currency down to Rs112.50 and Rs113.50 in the first trading session, against the previous week’s close of Rs113.50 and Rs114.50. The rupee-euro parity then remained unchanged at this level in the next two trading sessions.

Published in Dawn, Economic & Business ,July 21st, 2015

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