RENEWED concerns over the outcome of the Supreme Court enquiry into the Panama gate scandal seem to be playing the role of a catalyst in the domestic equity and currency markets.
Last week, the demand for dollar emerged in the open market as continuous foreign fund outflows from the equity market, together with payment related outflows, were seen to be exerting pressure on the currency market.
At the same time, the dollar, which climbed to a near 14-year high against a basket of currencies last week in overseas trade and staged a strong rally following Donald Trump’s victory in the US presidential election, also restricted the rupee stability in the local currency market.
The demand for dollar emerged in the open market as continuous foreign fund outflows together with payment related outflows were seen to be exerting pressure on the currency market
On the interbank market, the rupee was seen under pressure against the dollar after two weeks of stability due to fresh greenback demand.
Commencing the week in minus, the rupee escalated in narrow ranges against the dollar, trading between the high of Rs104.80/82 and Rs104.84/85 in the week.
The rupee to dollar exchange rate closed the week unchanged as the rupee continued to trade flatly against the dollar for the second straight day at Rs104.84 and Rs104.85 in the last trading session.
During the week in review, the dollar on the interbank market appreciated against the rupee by eight-paisa. In the past eleven months, the rupee/dollar parity has remained escalated between the high of Rs104.94/95 and the low of Rs104.35/37.
In the open market, the persistent decline in rupee value for the second week enabled the dollar to hit a nearly ten-week high as concerns over domestic political uncertainty and continued foreign selling in the domestic equity market dented sentiment.
Chart by RA
The week ended on a negative note. The dollar gained 20paisa at Rs106.40 and Rs106.60 as it powered to its highest levels since 2003 against a basket of currencies in overseas trade.
On week on week basis, the rupee lost 30paisa against the dollar in the open market last week.
Against the rupee, the dollar continued to fluctuate between the high of Rs106.50/70 and the low of Rs104.70/90 in the open market this year.
Against euro, the rupee managed to stage sharp recoveries last week.
Trading in narrow ranges during the week, the euro hit fresh lows against the rupee in almost ten months.
The week commenced on a positive note.
The rupee extended its strength against the euro in the last trading session, as it further picked up 80paisa before closing the week at Rs113.20 and Rs114.70, its highest level against the euro in the past eleven months.
On a week on week basis, the rupee last week gained Rs2.10 against the euro.
In 2016 so far, the euro has shown wider fluctuations against the rupee, trading between the high of Rs120.50/Rs121.50 that it hit on May 3 and the low of Rs113.20/Rs114.70 that it hit on Nov 18.