THE rupee continued to show strength over the US currency and other major currencies last week, both in the inter-bank market and in kerb trading. It did not show any sharp reaction to the news of the US attack on Afghanistan.

However, when market resumed trading on October 8, the rupee slipped 5 paisa against the dollar, as dullness prevailed in the inter-bank market. The dollar traded at Rs62.75 and Rs62.80 during the day compared with the previous weekend close of Rs62.70 and Rs62.75.

The parity assumed upward rising trend since October 9, after the dollar came under heavy selling pressure. The declining value of dollar in local market forced the exporters to sell dollar. Improvement in the stock market attracted many investors, and the investment was shifted from the currency market. Lack of demand for dollar in the inter-bank market helped rupee stage a sharp recovery. It gained 20 paisa over the overnight level to trade at Rs62.50 and Rs62.60 against the dollar on October 9.

The dollar remained under heavy selling pressure amid lack of local banks’ dollar-buying interest on October 10. The situation helped the rupee gain another 20 paisa for buying and 25 paisa for selling against the dollar, which traded at Rs62.30 and Rs62.35 during the day. On October 11, the rupee continued to rise as uncertainties prevailed. There was no buying interest in the market, while dollar supplies improved further. The rupee further gained 20 paisa versus the dollar, which was traded at Rs62.10 and Rs62.15 during the day.

There was not much activity in the inter-bank market on October 12, due to the strike. The dollar traded at Rs62.05 and Rs62.10. During the week, as a whole, the rupee gained 65 paisa over the previous weekend close of Rs62.70 and Rs62.75. At the close of the week on October 13, the rupee was trading at Rs61.20 and Rs62.45 against the dollar at the National Bank’s forex counter, 5 paisa gain over the previous day.

Against other major currencies at the inter-bank forex counter, the rupee managed to hold its firmness over the British pound, German mark, euro, Canadian, Australian, New Zealand, Hong Kong and the Singapore dollars. The Swiss, French and Belgian francs, Dutch gilder, Danish and Norwegian krones, Italian lira, Austrian schilling, Spanish peseta, Japanese yen, Chinese yuan, Malaysia ringgit, Kuwaiti dinar, Saudi and Qatri riyals and the UAE dirham. It, however, lost ground versus the Swedish krona.

In kerb trading the rupee gained 20 paisa for buying on the opening day of the week and traded at Rs63.90. However it remained unchanged at Rs64.20 for selling. The rising trend in rupee value continued on October 9. The rupee gained 10 paisa for buying and 25 paisa for selling amid dull trade. During the day the dollar was quoted at Rs63.80 and Rs63.95. The rupee, on October 10, recorded a sharp rise of 40 paisa for buying and 35 paisa for selling to trade at Rs63.40 and Rs63.60 against the dollar, amid extremely low business. Slight increase in the demand for dollar on October 11, however reversed the rising trend in rupee, which shed 10 paisa against the dollar to trade at Rs63.50 and Rs63.70.

It did not show any change on October 12, and remained pegged to the previous day’s close. The activity in he market was extremely low due to strike. Most money exchangers were closed. The rupee gained 60 paisa in the kerb during the week.

At present the market is directionless. Prediction for future trend is difficult at this stage. Much depends on the outcome of war and the developments taking place thereafter. But few currency analysts are optimistic about the positive developments taking place in Pakistan following removal of sanctions, which could have positive impact on the currency market.

In the international financial markets, the US currency skidded lower against the yen in typical knee-jerk reaction to the US-led strikes on Afghanistan. With the Japanese markets closed on October 8, the dollar fall was largely marked-down by traders reluctant to deal in any currency amid such uncertainty. The closure of treasuries and some futures contracts were further starving the market of direction. The dollar had slipped to 119.90 yen from 120.50 in New York late on the previous weekend close, a staid reaction compared to the fall of over two yen suffered on September 11.