THE local currency market appeared directionless last week as there was no charm amid Panama Papers issue, engulfing the tax evaders across the globe. Activity in the market was low due to the prevailing political situation that kept investors nervous.
No major development was witnessed in the local currency market where low demand for dollars amid easy supply kept the parity stable throughout the week.
On the interbank market, however, the parity moved both ways. Some demand existed in the market but foreign capital inflows were enough to meet that demand. As a result, the rupee showed sharp resistance against the dollar. Despite the greenback repeated attempts, the rupee did not allow the dollar to breach Rs105 barrier. Amid modest fluctuations, the dollar hovered against the rupee in narrow band between the low of Rs104.74/75 and high of Rs104.78/80 during the week.
Low demand for dollars amid easy supply keeps the parity stable
During the week, the rupee lost 10 paisas against the dollar in three sessions while at the same time it managed to recover four paisas in two sessions. On a week-on-week basis, the dollar managed to gain six paisas against the rupee on the interbank market.
In the open market, the rupee continued its steady trend versus the dollar amid dull trading activities. It commenced the week flat at Rs105.25 and Rs105.45 that was unchanged from the last closing.
It, however, posted five paisas gain in the second trading session with the dollar drifting slightly lower at Rs105.20 and Rs105.40. In the absence of trading interest and easy availability of dollar to cater low demand, the parity did not show any change against the dollar in the following two sessions. As a result, the rupee continued to trade flat against the dollar at Rs105.20 and Rs105.40 for three straight days.
The week ended on a plus note as the rupee posted fresh gain of five paisas against the dollar in the last trading session, hitting almost a 26-week high at Rs105.15 and Rs105.35.
Chart by RA
During the week, the dollar lost 10 paisas against the rupee in the open market. Local currency experts are of the view that lower commodity rates in the international market have dampened the demand for foreign currency.
Against euro, trading in narrow ranges between the low of Rs118.75/Rs119.75 and the high of Rs118.50/R119.50, the rupee assumed falling trend last week.
It commence the week in minus, extending weekend losses. It posted 20 paisas loss in the first trading session that enabled the euro to rise further to Rs118.50 and Rs119.50 from the prior weekend level of Rs118.30 and Rs119.30.
During the week, the rupee gained 75 paisas against the euro in the last two sessions after losing 45 paisas in the earlier sessions. On a week-on-week basis, the rupee still posted 30 paisas gain against the euro.