Local currency this week managed to recover its post election days losses versus the dollar and euro. The local currency market remained closed on the opening day of the week due to public holiday on account of general election on February 18.

When trading resumed on February 19, the inter bank market commenced trading on a positive note. Despite tight supplies of dollar, the rupee managed to stage a rebound against the dollar gaining 15 paisa over the previous week close of Rs63.11 and Rs63.13, changing hands at Rs62.96 and Rs62.98.

On February 20, the rupee extended its overnight firmness versus the dollar, registering a sharp recovery of 64 paisa to trade at Rs 62.32 and Rs 62.40. In two days of post election trading, the rupee in the inter bank market recovered 79 paisa. Upward trend in rupee/dollar parity persisted on February 21 for the third day in a row. The rupee further recovered 47 paisa against the dollar, which was seen trading at Rs 61.85 and Rs 61.90 at the close of the day.

After remaining firm for three days, the rupee failed to show its strength over the dollar on February 22, as it lost five paisa on the buying counter and another two paisa on the selling counter due to heavy rush of American currency buyers, particularly the importers. As a result of strong dollar buying, the inter bank rupee/dollar parity traded at Rs61.90 and Rs61.92 at the close of the day. Earlier in the previous three days trading session the rupee had gained 126 paisa versus the dollar. But fresh decline in rupee value on February 22 brought cumulative gains in rupee value this week down to 121 paisa.

In the open market, the rupee managed to gain five paisa against the dollar to trade at Rs63.25 and Rs63.35 on February 19, after closing last week at Rs63.30 and Rs63.40. The rupee extended its firmness over the dollar on February 20, as it further recovered 10 paisa to trade at Rs63.15 and Rs63.25 following improvement in dollar supplies. On February 21, the rupee in the open market continued its upward trend against the dollar, further gaining Rs1.30 to trade at Rs61.85 and Rs62.00.

On February 22, the rupee in the open market failed to hold its firmness versus the dollar and lost 25 paisa, amid rising demand from importers. At the close of the day the dollar was trading at Rs62.10 and Rs62.20. During the week in review, the rupee in the open market had gained 145 paisa against the dollar in the first three day’s trading. However, after shedding 25 paisa on the fourth trading day, the rupee gain over the dollar came down to 120 paisa on cumulative basis this week.

Versus European single common currency, the rupee gained five paisa on the buying counter and 15 paisa on the selling counter and traded at Rs92.75 and Rs92.85 on the first trading day.it had closed last week at Rs 92.80 and Rs 93.00. The rupee managed to extend its overnight firmness against the euro on the second trading day, changing hands at Rs91.65 and Rs91.85 after gaining Rs1.15 in single day trading. The rupee continued to appreciate sharply against the euro on the third trading day as it further gained 90 paisa to trade versus the euro at Rs90.75 and Rs90.85 on February 21.

On February 22, the rupee failed to hold its firm ground and fell sharply against euro and traded at Rs91.55 and Rs91.65, shedding 80 paisa on the preceding day level. This was the first fall in the rupee value against the European single common currency this week. Earlier in four trading sessions, the rupee had recovered 205 paisa. The decline in rupee value on February 22 brought cumulative gain versus euro this week down to 125 paisa.

In the international financial market, the dollar was little changed against the yen and the euro as many investors stuck to the sidelines ahead of US data this week to await further clues on the health of the economy. But traders said the dollar was finding some support on gains in Asian stock markets as well as hopes that the Federal Reserve’s rate cuts and the newly enacted fiscal stimulus package could rekindle US economic growth later this year. Trading activity was slow on the opening day of the week, with US financial markets closed later in the day for the President Day holiday.

The dollar edged up to 107.85 yen on February 18, from near 107.75 yen in US trade late last week, staying in a range between a three-year low of 104.95 yen hit in January and a high of 108.62 yen hit last week. The euro edged up 0.1 per cent to $1.4687. The euro has bounced back against major currencies after European Central Bank officials cooled speculation of lower rates later in the year. The Australian dollar was up about 0.5 per cent against the dollar at $0.9128 after climbing to a three-month peak of $0.9134. Sterling fell half a percent against the dollar to $1.9502.

On February 19, the dollar fell as investors worried that a spike in oil prices to record highs could further slow the US economy and prompt the Federal Reserve to again cut interest rates. The high-yielding Australian and New Zealand dollars posted strong performances, after booking early gains as a rise in global equities and commodities bolstered investor appetite for risky trades. Expectations that the European Central Bank would keep its benchmark lending rate at four per cent longer than previously anticipated pushed the euro to a two-week peak of $1.4757, according to Reuters data.

The Aussie dollar rose as high as US $0.9237, a level last seen in early November. It last traded at US $0.9188, up 0.6 per cent from a day earlier. This was as US stocks surrendered an earlier rally to end slightly lower on the day. The New Zealand dollar rode on the coattails of the Aussie’s rally, climbing to US $0.8022, its highest level since July. It was last up 0.3 per cent at $0.7971. The euro rose 0.5 per cent at $1.4726, while the dollar was down 0.4 percent at 107.71 yen. Sterling slipped to a one-month low against a basket of currencies. Against the dollar it was steady at $1.9519.

On February 20, the dollar rose but gains were constrained amid indications that the Federal Reserve would likely continue cutting US interest rates to heal an ailing economy even as inflation pressures mount. News that underlying inflation accelerated at a faster-than-forecast pace in January had earlier cooled expectations of steep rate cuts by the Fed, sending the euro tumbling to a session low of $1.4615.

In late New York trade, the euro was down 0.1 per cent at $1.4707. It slipped earlier after a top German politician said the country’s regional state-backed banks were in crisis.

Against the yen, the dollar last traded up 0.4 percent at 108.16 yen, off intraday highs at 108.36, boosted by a rise in US stocks. The dollar gained half a percent versus the Swiss franc to 1.0996 francs, while sterling dropped to a one-month low at $1.9356. The pound last traded at $1.9412, down 0.3 per cent from the previous day’s level. Oil’s surge above $100 per barrel, marking a record for a second straight day, pushed the dollar to a session low of C$1.0107. The dollar last traded down 0.4 percent at C$1.0126. Sterling plumbed a one-month low against the dollar. The pound dropped to a low of $1.9356 - a level last seen on January 22 - before clawing back to $1.9392 on the day.

On February 21, the euro rose to two-week highs against dollar at $1.4837, according to Reuters data. In the New York session it was trading at $1.4817, up 0.7 percent on the day and posting its biggest one-day advance against the greenback since January 28, at current prices. Falling US stocks dragged the dollar 0.7 percent lower to 107.31 yen. Against the Swiss franc, the dollar tumbled 1.0 percent to 1.0891. Sterling rose as high as $1.9597 - up more than a cent from pre-data levels and on track for its best daily performance since January 24.

At the close of the week on February 22, the dollar was stuck near two-week lows versus the euro after data showing the weakest regional factory activity since the last US recession in 2001 boosted expectations for a large Federal Reserve interest rate cut. The euro was little changed at $1.4802 after climbing to a two-week peak of $1.4838 on February 21. Traders said some market players took profits in the single currency earlier in the session, pushing it as low as $1.4789. The dollar inched up 0.2 percent against the yen to 107.46 yen after having fallen to a low of 107.15 the previous day. The pound was up 0.25 per cent versus the broadly softer dollar at $1.9683.