THE rupee has attained some stability after experiencing a volatile couple of weeks recently. However, dollar rates in the interbank market continued to be higher than those in the open market.

Analysts attributed this to heightened demand for the local currency by depositors as well as exchange companies from liquidity-starved banks ahead of the long Eid-ul-Azha holidays. This led to the rupee gaining ground against the dollar in interbank dealings.

Increased foreign exchange inflows from overseas Pakistanis also helped keep dollar rates in the open market under check.

On the interbank market, the rupee started the week by gaining two paisas, as the dollar slipped to Rs104.36 and Rs104.38 in the first trading session, against the prior week’s closing level of Rs104.38 and Rs104.40.

The dollar stayed unchanged against the rupee in interbank dealings but lost five paisas in two trading sessions last week

However, the rupee lost two paisas in the second trading session, with the dollar reverting to the previous week’s close of Rs104.38 and Rs104.40. As a result, the rupee-dollar parity remained unchanged in week’s first two trading sessions.

But the dollar has appreciated by 18 paisas so far this month in the interbank market.

Meanwhile, the rupee commenced last week in the open market by gaining 20 paisas, sending the dollar down to Rs104.10 and Rs104.30 in the first trading session, against the prior week’s close of Rs104.30 and Rs104.50.

However, with the dollar rebounding in Asia trade on Tuesday, the rupee gave back most of its earlier gains and dropped by 15 paisas in the second trading session. As a result, the dollar ended the day slightly higher at Rs104.25 and Rs104.45. During the week, the dollar depreciated by five paisas in the open market.

Against the euro, the rupee started the week by rising 100 paisas, sending the single currency down to Rs115.50 and 116.50 in the first trading session, against the previous week’s close of Rs116.50 and Rs117.50.

The local currency then rose by a further 50 paisas in the second trading session, as the euro slipped to Rs115.00 and Rs116.00 for the day. The euro had also fallen to its lowest since September 9 against the dollar, following US Federal Reserve officials’ comments indicating that the US central bank was still on track to raise interest rates this year.

During the week, the rupee appreciated by 150 paisas against the euro in two sessions, bringing its cumulative gain to 225 paisas so far this month.

The greenback has had a rollercoaster of a ride against the rupee over the past 18 or so months. It had fallen from a peak of Rs106/109 in January 2014 to around Rs99.95/98 by mid-August last year.

The rupee then descended against the dollar, hovering in the range of Rs100/102 on the interbank market and Rs101/103.60 in the open market between mid-August 2014 and this May.

From June onwards till the third week of August, the rupee-dollar parity stabilised in the range of Rs101.72/97 on the interbank market.

Published in Dawn, Business & Finance weekly, September 28th, 2015

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