THE local currency market witnessed volatile trade last week after the State Bank of Pakistan allowed market forces to determine the dollar exchange rate.

The week was reduced to four trading sessions on account of Pakistan Day Holiday on March 23.

On the interbank market, the rupee lost one paisa on Monday.

The dollar drifted slightly higher at Rs110.57 and Rs110.58 against the prior weekend’s level of Rs110.56 and Rs110.57.

On Tuesday, the rupee plunged over four per cent against the dollar, initially hitting an all-time low above Rs116, due to the central bank’s sudden move to allow rupee devaluation amid economic strains.

Later in the session, the rupee recovered losses and settled at Rs114.80 and Rs115.20, still losing Rs4.23 on the buying counter and Rs4.62 on the selling counter.

On Wednesday, the rupee lost 30 paisa on the buying counter, retaining overnight rate unchanged on the selling counter against the dollar at Rs115.10 and Rs115.20.

The dollar gained R4.74 on the interbank market during the week

On Thursday, the rupee lost 20 paisa on the buying counter and 30 paisa on the selling counter before closing the week at Rs115.30 and Rs115.50.

During the week, the dollar on the interbank market gained R4.74 on the buying counter and Rs4.93 on the selling counter.

The gap between the buying and selling rates first increased from one paisa to 40 paisa, falling to 20 paisa towards the close of the week.

In the open market, the rupee traded flat on Monday, retaining the previous weekend level at Rs111.50 and Rs111.80.

On Tuesday, however, the rupee came under sharp devaluation pressure triggered by payment pressures, breaching the Rs118 barrier.

Consequently, the rupee plunged as low as Rs116 in a single day trading.

However, it closed on slightly lower on Tuesday at Rs113.50 and Rs114.50 against the dollar, still losing Rs2 on the buying counter and Rs2.70 on the selling counter.

On Wednesday, the rupee shed 80 paisa against the dollar, closing the session at Rs114.30 and Rs115.30. On Thursday it closed the week flat at Rs114.30 and Rs115.30.

During the week, the dollar in the open market gained Rs2.80 on the buying counter and further Rs3.50 on the selling counter.

The gap between the buying and selling rates widened to 100 paisa from 30 paisa.

Against the euro, the rupee turned negative last week. On Monday, however, it traded flat retaining weekend level of Rs136.00 and Rs137.50.

Published in Dawn, The Business and Finance Weekly, March 26th, 2018