The rupee/dollar parity remained under downward pressure against the American and European currencies throughout this week as investors diverted their investments from stocks to the local currency market following imposition of emergency.

The week commenced on dismal note, as Karachi Stock Exchange suffered the biggest decline in the KSE index history as weak sentiment in the stock market, turned the investors to the forex market, pushing up the US currency value.

As a result of high dollar demand in the inter bank market, the rupee lost seven paisa on buying counter and another six paisa on selling counter, changing hands at Rs60.85 and Rs60.86 on the opening day of the week. The rupee had ended previous week at Rs60.77 and Rs60.79. Rupee weakness persisted on the second day of trading, when the rupee lost six paisa against dollar and traded at Rs60.84 and Rs60.86.

The rupee failed to resist decline in its value on third trading day of the week in review, losing five paisa to trade at Rs60.89 and Rs60.91. It further extended its overnight fall against dollar on the fourth trading day, slipping three paisa more to trade at Rs60.92 and Rs60.94, as the demand for dollar is persisted to meet the importers’ and other investors demand. The market was closed for public holiday on November 9 on account of Iqbal Day. During the week in review, the rupee in the inter bank market lost 15 paisa against the American currency.

In the open market the rupee fell against dollar by five paisa on the buying counter and six paisa on selling counter to trade at Rs60.78 and Rs60.85 on November 5, against Rs60.72 and Rs60.77 in the previous week. The dollar was sharply up on November 6, touching Rs61 mark, while the rupee lost 22 paisa against the dollar on buying counter and 23 paisa more on selling counter to trade at Rs60.90 and Rs 61.00

The rupee did not show any change against the dollar and traded at Rs60.90 and Rs 61.00 on November 7. The rupee was stable against dollar on November 8. It traded unchanged for the second consecutive week at Rs60.90 and Rs61.00. Trading remained suspended on the fifth day of the week in review on account of public holiday being Iqbal Day. This week, the rupee in the open market lost 18 paisa on buying counter and another 23 paisa on selling counter against the dollar.

Versus the single European currency, the rupee managed to recover 26 paisa on the week’s opening day and traded at Rs87.60 and Rs87.70 on the first day of trading against previous weekend’s Rs87.80 and Rs87.90. The rupee, unable to hold its overnight firmness, shed 20 paisa in relation to the euro on the second trading day trading at Rs87.80 and Rs87.90. On the third day of the week in review, the rupee remained unchanged and traded at its overnight levels.

On the fourth day of the week in review, the rupee depicted sharp decline in terms of euro, losing 90 paisa to trade at Rs88.70 and Rs88.80 as the single European currency heading to break new record in terms of the dollar. This week, the rupee on cumulative basis, shed 100 paisa against the European single common currency.

In the international financial markets, the yen strengthened on the week’s opening day as investors bailed out of some risky yen-funded currency bets in the wake of deepened fears that subprime mortgages would spread further havoc at US banks. At the same time, global stock markets slumped 1.1 per cent as investors shied away from many investments considered risky, including “carry trades. US and European banks in 2007 wrote down more than $23 billion of subprime-linked debt and some analysts see many more such write-downs.

In New York trade on November 5, the dollar was down 0.5 per cent to 114.27 yen. The euro fell 0.8 per cent against the Japanese currency to 165.29 yen, and also weakened 0.3 per cent against the dollar to $1.4461. The yen was also boosted by hawkish comments from Bank of Japan Governor Toshihiko Fukui, who underscored the need to raise interest rates in a timely manner.

Against the dollar, the euro was “resting a bit” after its surge last week. The euro reached a record high last weekend of $1.4528, according to Reuters data. In other trading, the high-yielding Australian dollar fell 0.4 per cent against the greenback to $0.9194. Sterling fell 0.5 per cent against the dollar to $2.0798 after data from Britain’s manufacturing and service sectors came in below forecast.

On November 6, the euro rose as high as $1.4571, according to Reuters data, its highest since its 1999 launch. It was last trading at $1.4552, up 0.6 per cent on the day. It was the ninth time in 11 days the euro advanced. The dollar crept 0.07 per cent up against the yen to 114.52 yen. The Australian dollar strengthened 0.7 percent to $0.9263. The pound was trading at $2.0877, up 0.38 per cent on the day, having earlier risen as high as $2.0906. Last week, sterling set a 26-year high at $2.0907.

On November 7, the dollar tumbled to record lows against the euro after comments by a Chinese official stoked fears the central bank of the world’s fourth largest economy would reduce its holdings of US assets. The dollar’s decline was broad, also taking it to all-time lows against a basket of major currencies, as sentiment further darkened after General Motors posted its biggest quarterly loss ever.

The euro raced to an all-time high of $1.4730, according to Reuters data, before retreating to $1.4665, still up 0.8 percent against the dollar on the day. Against the yen, the dollar fell 1.5 per cent to 112.95. Sterling jumped to a 26-year high of 2.1071. It last traded at $2.1045, up 0.8 per cent on the day. The Reserve Bank of Australia raised rates by a quarter-percentage point to an 11-year high of 6.75 percent, which sent the Australian dollar to a 23-year high of US $0.9401. It last traded at $0.9322, up 0.4 per cent.

On November 8, the dollar fell to near record lows against the euro as a downbeat economic forecast from Federal Reserve Chairman cemented the market’s view that the Fed will cut interest rates in December. The euro pushed to session highs at $1.4703 and was last trading at $1.4676, up 0.2 per cent from $1.4643. It touched a record high of $1.4730 on November 7. Since hitting a two-month low in August, the euro has climbed 10 per cent against the dollar.

Against the yen, the dollar weakened 0.2 per cent to 112.35 yen, after earlier falling to an almost three-month low of 112.02 yen. The dollar sank 0.7 per cent against the Swiss franc to $1.1255, the lowest since October 1995. Sterling rose to fresh 26-year highs against the dollar after the Bank of England left interest rates unchanged at 5.75 per cent. It rose as high as $2.1117, the first time it’s been above $2.11 for the first time since 1981.

At the close of the week on November 9, the euro seems to be hitting its peak in Tokyo. It rose 0.35 per cent from late US trade on November 8 to $1.4724 after jumping earlier to an all-time high of $1.4739. The dollar, however, managed to hold its ground against the low-yielding Japanese currency and stood at 112.66 yen little changed from late New York and off a three-month low of 112.00 yen. It extended its overnight slide against the Swiss franc and fell to as low as 1.1208 francs the lowest since 1995. The pound had fallen 0.5 per cent on the day versus the dollar to trade at $2.0972, after earlier reaching as high as $2.1161.