The rupee managed to put a stop to its sharp decline against the dollar last week in the local currency market, but continued to slide in the interbank market.
However, the rupee surprised analysts with its last session performance in the open market, where it staged a marginal recovery after confusions over the caretaker setup and general elections fizzled out, following the announcement of the election schedule.
The rupee/dollar parity had remained stable at Rs99.00 and Rs99.25 in the open market for more than six weeks, and most analysts were of the view that the rupee might weaken towards the end of March as the country makes payments to the IMF.
On the interbank market this week, the rupee continued its downward slide amid mounting dollar demand. It commenced the week on March 25 with a ten paisa decline, with dollar changing hands at Rs98.30 and Rs98.35.
The dollar had ended last week at Rs98.20 and Rs98.25.
The rupee slipped lower on the second straight day on March 26 as well, when it traded at Rs98.40 and Rs98.42, after sliding by ten paisa on the buying counter and seven paisa on the selling counter.
However, it managed to inch up by one paisa in the third trading session, with the dollar last changing hands at Rs98.39 and Rs98.41 on the day.
But the rupee resumed its downward trajectory against the dollar in the fourth trading session, as it went down by one paisa on the buying counter and two paisa on the selling counter, and last traded at Rs98.40 and Rs98.43.
In the last trading session of the week on March 29, the rupee shed three paisa on the buying counter and two paisa on the selling counter amid rising dollar demand.
It closed the week against the dollar at Rs98.43 and Rs98.45. On week over week basis, the dollar in interbank dealings gained 23 paisa this week.
However, the spread between buying and selling rates had been restricted to two paisa in the interbank market, and 25 paisa in the open market.
In the open market, the rupee remained stable against the dollar for the past month and a half, at Rs99.00 and Rs99.25, following the central bank’s decision to impose a maximum limit of 25 paisa on the spread between buying and selling rates of foreign currencies.
Contrary to analysts’ forecast for a further weakening of the rupee by end March in view of heavy payments to the IMF, the rupee showed a positive change as it picked up 15 paisa on the fourth trading session.
The dollar traded for Rs98.85 and Rs99.10 on the day. This was the first change in rupee-dollar parity since February 12.
In the last trading session of the week, the rupee was flat against the dollar at overnight levels, and closed the week at Rs98.85 and Rs99.10.
During the week, the rupee gained 0.15 per cent against the dollar this week.
But the dollar was still trading at a premium of 55 paisa in the open market, as compared to the interbank market.
The rupee also showed strength against the euro, as it gained against the single currency in three straight trading sessions and almost gained a cumulative Rs3.20 before almost hitting its four month high.
However, it did not start the week on a positive note, as it shed 75 paisa against the euro to trade at Rs128.75 and Rs129.00, compared with the previous weekend’s level of Rs128.00 and Rs128.25.
In the second trading session, the rupee picked up a staggering Rs1.45 against the common currency to trade at Rs127.30 and Rs127.55.
The rupee extended its overnight firmness against the common currency in the third trading session, as it picked up another Rs1.50 to trade at Rs126.25 and Rs126.50.
The momentum continued into the fourth trading session, as the rupee gained another 25 paisa to trade at Rs126.00 and Rs126.25 against the euro.
It ended the week unchanged against the euro, trading flat at Rs126.00 and Rs126.25.
On the international front, the euro fell against the dollar in first trading in New York. The euro slid more than one per cent against the dollar to its four-month low of $1.2829.
In late trade, it was last down 1.02 per cent at $1.2852, far below a session high of $1.3048 that was set after the Cyprus bailout deal was struck.
Against the yen, the dollar was last up 0.3 per cent to trade at 94.18 yen. In London trade, sterling was last down 0.3 per cent at $1.5183, off a one-month high of around $1.5259 that it had hit in the wake of the Cyprus agreement.
The UK currency tends to do well against the safe-haven currency when investors feel confident.
On March 26, the euro hovered near a four-month low against the dollar, and last traded at $1.2858, slightly up for the day, after having fallen as low as $1.2827, its lowest level since November 22.
The dollar gained 0.3 per cent against the yen to trade at 94.46 yen.
In London trade, sterling fell 0.1 per cent to $1.5150, well below a one-month high of $1.5280 it had hit on March 25.
On March 27, the euro fell to its lowest level against the dollar in four months, at $1.2750, and last traded at $1.2776, down 0.65 per cent on the day. It was off over three per cent so far this year.
The dollar last traded at 94.43 against the Japanese currency, up 0.02 per cent on the day, according to Reuters data.
Sterling was down 0.3 per cent against the dollar at $1.5118. Reported option barriers at $1.5100 could keep it pinned near these levels.
On March 28, the euro rose against the dollar, a day after having hit its four-month low, and last traded up 0.28 per cent at $1.2816.
It was positioned to show a drop of about 1.8 per cent for March, its second straight monthly loss.
Against the Japanese currency, the dollar last traded at 94.14 yen, down 0.31 per cent on the day.
In London, sterling rose against the dollar and recovered from its fall of the previous day.
It was last up 0.2 per cent to trade at $1.5158, off a low of $1.5090.
At the close of the week on March 29, trading activities were subdued, with many markets closed for Easter holidays.
In Asian trade, however, the common currency lost 0.1 per cent against the dollar to trade at $1.2805, giving up modest gains it had recorded in the earlier session.
The euro is down 2.9 per cent since this January, and on track to mark its first quarterly decline since the April-June period in 2012.
The greenback slipped 0.1 per cent against the yen to trade at 94.03.
Expectations of gutsy easing from the Bank of Japan in its monetary policy review on April 3-4 have left the dollar poised to record an 8.4 per cent quarterly gain against the yen, which would mark its first gain for two straight quarters since 2009.
