Globally, the dollar slipped in 2016’s final session. The rally has taken the index to levels last seen in 2002.

Internationally, the dollar has been in a pronounced uptrend since August, gaining nearly 10pc over that period. Its march upward has been especially pronounced since the November US presidential election, gaining almost 5pc against major rivals in the overseas trade.

The dollar index against a basket of six major rivals was on track to gain 3.5pc for the year.

In the local currency market, trading activity remained on the lower side last week with many key overseas markets closed for the Christmas holidays.

Mixed sentiments were observed during the week as the rupee was seen strengthening against the dollar towards the year-end.

Dollar supply and demand was almost balanced on the interbank market but demand from corporate sector and importers existed in the open market.

The rupee hit a three year low against the dollar in the open market on Dec22. It, however, resisted a further dollar rise last week and continued to trade in a narrow band between Rs108.00/20 and Rs108.20/40.

On month on month basis, however, the dollar appreciated by 0.55pc against the rupee, trading in the range between Rs106.50/70 and Rs108.30/60 during December.

In 2016, the rupee depreciated by 2pc against the dollar amid fluctuations.

Last week on the interbank market, the rupee/dollar parity continued to show steady trend, moving between the high of Rs104.60/63 and low of Rs104.85/90, amid thin trading.

The week ended on a plus note as the rupee managed to recover 25paisa against the dollar in the last trading session before hitting a four-month high at Rs104.60 and Rs104.63.

On week on week basis, the dollar on the interbank market lost 25paisa on the buying counter and 23paisa on the selling counter against the rupee last week.

In the open market, the rupee showed mixed sentiments against the dollar, moving both ways in a tight band.

Commencing the week on a positive note, the rupee staged a recovery against the dollar. As a result the dollar descended to Rs108.00 and Rs108.20 from the prior weekend level of Rs108.20 and Rs108.50.

In the third trading session, however, the rupee failed to hold its overnight firmness against the dollar.

The rupee continued its downslide in the fourth trading session as the dollar strengthened against its major rivals in overseas trade, advancing for a second straight day on continued optimism over economic growth and inflation prospects.

However, the week ended on a happy note. The rupee in the last trading session gained ten-paisa and closed the week at Rs108.10 and Rs108.30 after the dollar managed to cut a fourth straight year of gains against a basket of major currencies in overseas trade.

Against euro, the rupee maintained a fluctuating trend.

The euro extended its overnight firmness against the rupee as the rupee continued its downslide in the last trading session, shedding another 20paisa to close the week at Rs112.80 and Rs114.30.

During the week in review, the rupee lost 80paisa on the buying counter and Rs1.30 on the selling counter in three sessions while it gained 60paisa on the buying counter and Rs1.10 on the selling counter in two sessions.

Overall, the euro still managed to gain 20paisa over the rupee on week on week basis.

Published in Dawn, Business & Finance weekly, January 2nd, 2017