In the local currency market, the rupee showed a divergent trend versus the dollar and euro last week.
Minor changes were witnessed in the rupee/dollar parity on the interbank market where the rupee moved both ways amid escalating dollar demand and hovered in narrow ranges between the low of Rs104.85/87 and the high of Rs104.84/85.
In the overseas trade, the greenback was flat on the week against a basket of major currencies, having fallen 2pc last week, its worst showing since April, on a much-weaker-than-expected set of US growth data and a statement from the Federal Reserve that failed to give a clear signal of a near-term rate rise.
Most emerging Asian currencies rose at the close of the week and were set to see weekly gains as the Bank of England’s larger-than-expected monetary stimulus helped investors keep seeking higher yields in the region while markets braced for key US job data.
In the local currency market, the rupee continued its fluctuating trend last week. It commenced the week on a negative note as it inched down on the interbank market amid a slow trading process and traded against the dollar at Rs104.85 and Rs104.86 in the first trading session against the last closing of Rs104.84 and Rs104.85.
The rupee ended the week against the dollar on a negative note, closing the week at Rs104.62 and Rs104.63, a level last seen close to June 3, as the dollar rallied across the board in overseas trade after data showed US employment increased more than expected in July and wages picked up; raising the probability of an interest rate hike from the Federal Reserve this year.
Chart by RA
In the open market, the rupee continued under pressure against the dollar for the second consecutive week. The dollar is now seen heading towards the Rs107 mark after surpassing the Rs106 barrier last week. The rupee commenced the week in minus after continuing its downtrend against the dollar.
The week ended on a negative note as the rupee’s weakness persisted against the dollar in the last trading session, when the rupee posted ten-paisa loss and plunged almost to five-month lows at Rs106.00 and Rs106.20.
In overseas trade, meanwhile, the dollar gained against a basket of currencies as investors continued to balance positions ahead of the weekend’s crucial US nonfarm payrolls report for July, while the sterling sank towards $1.30, its weakest in three weeks, after stronger-than-expected jobs numbers in the US strengthened speculation that interest rates would rise this year. The dollar in the local market hit Rs106.20, its highest level since March.
Against euro, pressure was seen building up on the rupee as the rupee turned negative last week.
The week ended on a negative note after the euro managed to recover 25paisa in the last trading session and climbed to Rs117.50 and Rs118.50 as the euro hit one-week lows against the euro in international trade and the British pound licked its wounds a day after the Bank of England not only cut interest rates but also restarted its bond purchase programme to shore up the economy.