CALM prevailed in the local currency market last week. The rupee/dollar parity traded almost flat amid minor fluctuations. Major currency players also stayed on the sidelines. Both the demand and supply of dollar remained in balance.
Falling international oil prices had slowed down the demand from importers.The crude oil prices have tumbled to 12-year low levels due to a global supply glut. The rupee, however, remained depressed against the euro despite showing a recovery trend in the week’s first four trading sessions. It touched Rs117 mark on the selling counter after hitting a four-week low in the week.
In the first two weeks of 2016, the rupee has shown a depreciation of 0.2pc against the dollar in the interbank and 0.1pc in the open market. In 2015, the rupee had depreciated by 3.8pc in the interbank market and by 5.2pc in the open market. In the week’s opening session, the rupee showed a stable trend on the interbank market and traded against the dollar at Rs104.93 and Rs104.95 in the first trading session, unchanged from the previous weekend’s level. Supply of dollars was sufficient enough to meet demand from the importers amid low volume of trade.
Due to easy availability of foreign exchange with banks
The market observed a steadier trend in the remaining sessions amid minor changes on the selling counter. Dollar traded unchanged against the dollar on the buying counter with slight variations on the selling counter in all the four sessions. In the second trading session, the rupee inched up against the dollar by one paisa on the selling counter while trading flat on the buying counter before closing the session at Rs104.93 and Rs104.94.
In the third trading session, the parity reverted back to the week’s opening session level. The rupee was seen changing hands against the dollar at Rs104.93 and Rs104.95 after shedding one paisa on the selling counter and remaining unchanged on the buying counter for the third straight day.
The week ended on a positive note as the rupee posted marginal gains against the dollar in the last trading session due to easy availability of foreign exchange with banks. During the week in review, the dollar lost two paisas against the rupee in interbank dealings. In the first two weeks, the dollar in rupee terms recorded the high of Rs104.93/95 and low of Rs104.88/90.
Chart by RA
In the open market, however, currency players witnessed a divergent trend last week. Contrary to interbank dealings, the rupee in the open market commenced the week on a negative note. The rupee hovered against the dollar in a range of Rs106.00/10 and Rs106.20/30 during the week. It shed 10 paisas in the week’s opening session, trading at Rs106.00 and Rs106.20 in the first trading session and lower than the last closing of Rs105.90 and Rs106.10, on persistent dollar demand from importers amid fall in equity market.
On week on week basis, however, the dollar in the open market appreciated by 20paisa against the rupee during the week.
Against euro, the rupee last week turned positive, assuming upward movement after the previous week closed in minus.
The week commenced with a 15 paisas rise at Rs115.60 and Rs116.60 in the first trading session against prior week close at Rs115.75 and Rs116.75. The rupee further extended gains in the second trading session after euro posted 30 paisas loss and tumbled to Rs115.30 and Rs116.30. Continuing its upward march for the third day in a row, the rupee picked up 10 paisas more in the third trading session that pushed euro further down, hitting its highest level in the week at Rs115.20 and Rs116.20.
However, after posting 55 paisas gain against euro in the first three sessions, the rupee lost 80 paisas and plunged to almost five-week lows at Rs116.00 and Rs117.00after the euro gained around half 0.5pc against the dollar in European trade following a report that European Central Bank policymakers are skeptical about the need for further policy action in the near term.
On week on week basis, however, the euro managed to gain five paisas against the rupee. In the first two weeks of January, the euro posted 60 paisas gain against the rupee. The rupee has appreciated against euro by 5.6pc in 2015.