THE local currency market witnessed range-bound trading amid lacklustre activities last week. The rupee mostly traded in the positive zone against the dollar in the interbank dealings, while the parity traded flat in the open market. The demand for dollar was low that matched comfortable supplies.

Though the rupee seems to have stabilised against the dollar at Rs106 in recent weeks, leading analysts have expressed their fear that the dollar could rise to Rs108 in the second half of half of 2016 after remaining in Rs105.90 and Rs106.20 band in the first quarter.

Owing to demand pressure from oil importers and of corporate payments, the rupee posted five paisas loss in the first trading session with the dollar changing hands at Rs104.84 and Rs104.85 against the last closing of Rs104.79 and Rs104.80.

In the second trading session, the rupee managed to recover five paisas against the dollar at Rs104.79 and Rs104.81. For the second straight day, the rupee extended gains amid low dollar demand. It picked up 12 paisas and pushed the dollar down to Rs104.67 and Rs104.70.

The demand for dollar was low that matched comfortable supplies

In the fourth trading session, the dollar continued its downslide versus the rupee for the third successive day and slipped to a ten-day low at Rs104.65 and Rs104.68 after the rupee inched up by another two paisas.

On week-on-week basis, the dollar in the interbank dealings suffered a loss of up to 19 paisas against the rupee. In February, the dollar in the interbank market lost 33 paisas against the rupee as compared to 17 paisas’ appreciation in January.

In the open market, the rupee showed a stable trend against the dollar throughout the last week after commencing in a negative mode. It shed 10 paisas in the first trading session to Rs106.00 and Rs106.20 from the last closing level of Rs105.90 and Rs106.10.

In the second trading session, the rupee sustained the overnight firmness and traded unchanged at Rs106.00 and Rs106.20 for three straight sessions due to dull trading activities in the stock market. However, sudden pickup in demand for import payments in the last trading session pushed up the dollar value against the rupee.

At the close of the week, the dollar was seen changing hands against the rupee at Rs106.10 and Rs106.30.

Against euro, the rupee remained fluctuated in a narrow band of Rs116.25/60 and Rs117.25/60. Commencing the week on a positive note, it posted 100 paisas gain in the first trading session with euro changing hands at Rs116.25 and Rs117.25 against the prior week close of Rs117.25 and Rs118.25. It, however, turned negative in the second trading, losing five paisas at Rs116.30 and Rs117.30. The rupee managed to stage a recovery in the third trading session as it posted 50 paisas gain against the euro, hitting almost one-month high at Rs115.80 and Rs116.80, a level last seen on Jan 30.

The rupee thus gained 75 paisas against the euro on week-on-week basis.

Published in Dawn, Business & Finance weekly, February 29th, 2016