THE rupee weakened slightly against the dollar in the local currency market last week amid thin trading volumes.

Trading was reduced to four days and major market players in both the currency and equity markets were said to be on the sidelines ahead of the Ashura holidays.

On the interbank market, the rupee commenced the week by losing five paisas for buying and six paisas for selling, sending the greenback up at Rs104.42 and Rs104.44 in the first trading session against the prior week’s closing level of Rs104.37 and Rs104.38.

The dollar appreciated by eight paisas in interbank dealings and by five paisas in the open market last week

However, the rupee regained one-paisa for buying and two paisas for selling in the second trading session, as the dollar dipped to Rs104.41 and Rs104.42.

The local currency then shed two paisas in the third trading session, as the dollar rose marginally to Rs104.43 and Rs104.44 for the day. The rupee dropped by another two paisas in the fourth and last trading session, as the dollar closed the week up at Rs104.45 and Rs104.46.

As a result, the dollar appreciated by a net eight paisas in the interbank market last week.

In the open market, the rupee came under pressure on fresh dollar demand in the week’s opening session despite persistent foreign inflows. Commencing the week on a negative note, the rupee shed 10 paisas in the first trading session, allowing the dollar to rise to Rs104.50 and Rs104.70 against the prior week’s close of Rs104.40 and Rs104.60.

In the overseas market, the dollar had risen against major rivals after third-quarter Chinese GDP numbers were said to have been better-than-expected.

The rupee staged a partial recovery in the second trading session as it managed to pick up five paisas and sent the dollar down slightly to Rs104.45 and Rs104.65 for the day. The rupee-dollar parity then remained unchanged at this level in the next two trading sessions, after the dollar rose against emerging market and commodity-linked currencies in overseas trade.

As a result, the dollar appreciated by five paisas in the open market last week.

The rupee performed slightly better against the euro last week, amid mild fluctuations. It commenced the week by rising 10 paisas, sending the euro down to Rs118.00 and Rs119.00 in the first trading session against the prior week’s close of Rs118.10 and Rs119.10.

However, the rupee dropped by a big 50 paisas in the second trading session, as the euro rose to Rs118.50 and Rs119.50 for the day. But the rupee bounced back in the third trading session and picked up 25 paisas, as the euro dropped to Rs118.25 and Rs119.25.

The rupee gained another 25 paisas in the fourth trading session, as the single currency closed the week at Rs118.00 and Rs119.00. The euro dropped 10 paisas against the rupee last week.

Published in Dawn, Business & Finance weekly, October 26th , 2015

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