The rupee touched the lifetime low level against dollar in the currency market during the week ended on August 16, 2008. In the interbank market, the rupee dipped and lost 325 paisa to 76.60 for buying and 290 paisa for selling at 76.65 in the absences of visible intervention by the State Bank of Pakistan (SBP).
The rupee followed same print in the open market and lost 280 paisa versus dollar for buying at 76.50 and 300 paisa for selling at 77.00. It also lost Rs 2.00 versus euro for buying and selling at Rs 111.80 and 112.00. Higher demand for dollars from different quarters was in fact the leading factor, which forced the rupee to surrender its gains in terms of US currency.
Besides, political instability in the country also caused uncertainty among local and foreign investors. This was the main factor for the falling trend in foreign exchange reserves.
In the meantime, there were expectations about inflows of capital in the coming days which may help to rescue the rupee. There were expectations that the State Bank of Pakistan (SBP) may come with some preventive measures to stop the dollar's berserk following the unforeseen uncertainties.
INTER-BANK MARKET RATES: On Monday, the rupee lost 57 paisa against dollar for buying at 73.35 while and 60 paisa for selling at 73.40. On Tuesday, the rupee lost 37 paisa for buying at 73.72 and 35 paisa for selling at 73.75.
On Wednesday, the rupee lost 128 paisa for buying at 75.00 and 135 paisa for selling at 75.10.
On Thursday, the financial markets were closed on account of Independence Day holiday. On Friday, the rupee fell 140 paisa against dollar for buying and selling at 76.40 and 76.50.
On Saturday, the rupee shed 20 paisa against dollar for buying at 76.60 and 15 paisa for selling at 76.65.
WORLD VALUE OF DOLLAR: In the first trading session, the dollar vaulted to a six-month high against a basket of currencies, racking up more gains as heightened worries about the global economy's strength sparked a sell-off in the euro and higher yielding currencies.
The euro fell below $1.50 after breaking a slew of key chart levels that had convinced some analysts that the dollar might be in the process of snapping its seven-year slide.
The dollar hit a six-month high against a basket of major currencies amid second session as mounting concern that the global economy is headed for a sharper slowdown spurred more selling of the euro and higher yielding currencies.
The euro slumped to a six-month low against the dollar, while the pound slid to a 21-month trough as investors kept bailing out of bets that the global economy could withstand the housing-driven downturn in the United States.
In the third Asian trading, the yen rose broadly, hitting a two-year high against the New Zealand dollar, as a tumble in high-yielding currencies forced Japanese margin traders making leveraged bets to limit losses by dumping their holdings.
Market players are worried that Japanese day traders, who have built up record bets favouring the Australian and New Zealand dollars on the Tokyo Financial Exchange, are still heavily exposed and may be forced to sell more into any drop.
During the fifth and final session of the week, the dollar struck a six-month high against the euro, with more investors bailing out of bets favouring the single currency and commodities as evidence mounts of a slowing global economy.
Gold tumbled nearly 3 percent to be below $800 and silver plunged 11 percent, prompting more investors to unwind their bets against the dollar and driving the US currency's trade-weighted index up to a six-month high. In the New York market, the US dollar jumped to a six-month high against the euro, buoyed by another drop in oil prices and growing views the US economic slowdown may be bottoming while growth in the euro zone stalls.
The dollar posted a fifth week of gains against the euro as investors shifted their view on the global economy's ability to withstand a downturn initiated in the United States. The greenback has rallied nearly six percent against the euro zone single currency this month.
OPEN MARKET RATES: On August 11, the rupee touched the low level at 74.00 amid hectic demand for the US currency. The rupee, lost sharply versus the greenback for buying and selling at 73.70 and 74.00.
The rupee, however, rose by 60 paisa versus euro for buying at Rs 109.80 and 55 paisa for selling at Rs 110.00. On August 12, the rupee lost 50 paisa against dollar for buying at 74.20 and 40 paisa for selling at 74.40.
The rupee, however, gained 40 paisa versus euro for buying at Rs 109.40 and 50 paisa for selling at Rs 109.50.
On August 13, the rupee lost 105 paisa against dollar for buying at 75.25 and 90 paisa for selling at 75.30. The rupee also shed 120 paisa against euro for buying at Rs 110.90 and 110 paisa for selling at Rs 111.10. On August 14, the markets were closed due to Independence Day holiday.
On August 15, the rupee lost 125 paisa in terms of dollars for buying at Rs 76.50 and 170 paisa for selling at 77.00. The rupee also shed 90 paisa versus euro for buying and selling at Rs 111.80 and Rs 112.00.
On August 16, the rupee firmly held its overnight levels against dollar for buying and selling at 76.50 and 77.00, respectively. The rupee followed same trend against euro for buying and selling at Rs 111.80 and Rs 112.00.
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