The rupee remained largely range-bound against the dollar in both the interbank and open markets last week, as trading was reduced to three sessions owing to the Eid break.

While some market participants were said to have taken new positions in the week, a few analysts expect the market to return to normalcy from this week.

On the interbank market, the rupee dropped by nine paisas for buying and 10 paisas for selling in the first trading session on Wednesday amid reports of higher dollar demand. As a result, the dollar rose to Rs101.87 and Rs101.90 for the day, against the prior week’s closing level of Rs101.78 and Rs101.80.

The dollar rose by about six paisas in interbank dealings but lost 25 paisas in the open market last week

In the second trading session, the rupee managed to recover five paisas for buying and seven paisas for selling, as the greenback slipped to Rs101.82 and Rs101.83 reportedly on fresh forex inflows into the market.

However, the local currency shed two paisas in the last trading session, allowing the dollar to close the week slightly up at Rs101.84 and Rs101.85. Consequently, the dollar appreciated by a six paisas for buying and five paisas for selling last week.

Chart by RA

In the open market, the rupee-dollar parity moved in a narrow range amid low trading volume. The demand for dollar was said to be low in the first trading session as most retail investors were said to be on the sidelines.

The rupee ended up rising 10 paisas on Wednesday, a slight relief from the big 55-paisa drop it had witnessed in the last session before the Eid holidays. As a result, the dollar ended the first trading session at Rs103.15 and Rs103.40, against the prior week’s close of Rs103.25 and Rs103.50.

The local currency then posted another gain of 15 paisas, as the greenback dipped to Rs103.00 and Rs103.25 in the second trading session amid ample forex supplies. The rupee then stayed unchanged for buying in the last trading session, but picked up five paisas for selling, as the dollar closed the week at Rs103.00 and Rs103.20.

During the week, the dollar shed 25 paisas for buying and 30 paisas for selling in the open market.

The rupee also remained range-bound against the euro last week. It commenced the week by losing 15 paisas, sending the single currency up at Rs111.75 and Rs112.75 in the first trading session, against the previous week’s close of Rs111.60 and Rs112.60.

The local currency then dropped by a further 45 paisas in the second trading session, as the euro ended the day higher at Rs112.20 and Rs113.20.

However, the rupee managed to end its losing streak and gained 70 paisas in the last trading session, as the euro closed the week at Rs111.50 and Rs112.50. As a result, the rupee gained 10 paisas against the euro last week. In the last two weeks, however, the parity has remained range-bound amid marginal fluctuations.

Published in Dawn, Economic & Business, July 27th, 2015

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