THE RUPEE: firm trend

Strong supply of dollars helped the rupee to recover its losses versus the US currency during the week ended on June 6, 2009. On the interbank market, the rupee posted gain of 40 paisa in terms of dollar for buying and selling at 80.80 and 80.85, respectively.
The rupee followed the same pattern on the open market, gaining 30 paisa against dollar for buying and selling at 80.90 and 81.10. But versus euro, the rupee remained under pressure, yet cut some losses, drifting lower by Re.one for buying and selling at Rs 113.50 and Rs 114.50.
In early sessions of the week, the rupee maintained its rise over the easy supply of the dollar. However, whenever the US currency supply dried slightly, the rupee turned vulnerable.
Importers' rush for dollars shadowed dollars' comfortable availability as a result of significant improvement in inflows of dollars in the foreign exchange reserves.
Till the end of the outgoing fiscal year, it is most likely that the rupee might trade range-bound, or travel on the divergent trend versus the greenback. Before time, it is very difficult to predict about the direction on the money market but one factor is very much visible and that is strong supply of dollars, which may help the rupee to resist steep fall versus the dollar ahead of announcement of 2009-10 budget.
According to State Bank weekly data, foreign exchange reserves rose by 330 million dollars to 11.52 billion dollars. But it is not sure that during the heavy payments by the importers, the reserves would be able to retain the current level
INTER-BANK MARKET RATES: On Monday, the rupee shed five paisa versus dollar for buying and selling at 81.20 and 81.25.
On Tuesday, the rupee recovered 14 paisa against dollar for buying at 81.06 and 17 paisa for selling at 81.08. On Wednesday, the rupee gained 31paisa against dollar for buying at 80.75 and 28 paisa for selling at 80.80.
On Thursday, the rupee gained 7 paisa against dollar for buying at 80.68 and 6 paisa for selling at 80.74 amid strong supply of US currency.
On Friday, the rupee fell 12 paisa against dollar for buying at 80.80 and it also lost 11 paisa for selling at 80.85 in process of trading. On Saturday, the rupee held its overnight level in terms of dollar for buying at 80.80 and for selling at 80.85.
OVERSEAS OUTLOOK FOR DOLLAR: In the beginning session of the week, the dollar lost its footing and headed back to multi-month lows against commodity-related currencies, the euro and sterling, as investor appetite for higher-yielding assets continued to recover.
Markets took in stride the news that General Motors Corp would file for Chapter 11 bankruptcy protection later on Monday, with the move long expected. During second Asian trade, the dollar steadied after hitting its lowest this year against the euro and a basket of currencies the previous day as reassuring economic data and a rally in global shares reduced demand for the reserve currency.
In the third session, the dollar hit the year's lows against the Australian dollar and sterling after upbeat US housing data the previous day buoyed risk appetite and reduced safe-haven demand for the greenback.
The Australian dollar set eight-month highs against the dollar and yen after data showed the economy managed to avoid recession in the first quarter of the year and grew more than expected. In the fourth session in Asia, the dollar mostly held its ground after a big reversal from 2009 lows on comments by Asian monetary officials and weaker-than-expected US data that took the wind out of a risk rally in other major currencies.
Investors had a reality check on Wednesday when data showed the vast US service sector contracted for the eighth straight month in May and employers axed 532,000 private-sector jobs, undermining optimism about an economic turnaround.
Amid final Asian trading, the dollar inched down against a basket of major currencies, with investors shifting money to higher-yielding currencies on the view that the recession hitting the world's major economies is easing. Sterling was under pressure as political uncertainty deepened in Britain with a third senior minister quitting the government on Thursday and calling on Prime Minister Gordon Brown to step down to improve his party's chances at a general election due within a year.
At the weekend, in NY market, the dollar posted its largest one-day gain against a basket of currencies in more than five months after data showed the United States shed fewer jobs than expected in May, boosting hopes for an economic recovery.
The dollar initially sold off after the jobs report, which showed the US economy shed 345,000 jobs, well below the 520,000 expected by economists. In the past, the dollar had fallen in response to data hinting at improvement in the US economy, with investors moving into riskier assets, including higher-yielding currencies.
For the next week, though still vulnerable to selling pressure, the dollar enters the new week with the vague hope that US efforts to revive a moribund economy may finally be starting to pay off.
After tumbling in May, the dollar stabilised this week before rallying sharply on Friday when a report revealed US employers cut 345,000 jobs last month, far fewer than expected and the fewest since the height of the crisis in September.
The euro fell back below $1.40 after climbing $1.4337 earlier in the week, its 2009 high. Besides, a euro rally against the dollar has forced foreign exchange strategists to ditch their forecasts made only last month for the common currency to hold around $1.30, and some now think it could crack $1.50, a Reuters poll showed.
Median forecasts in the poll of around 60 strategists published on Wednesday showed the euro trading at $1.40 by the end of the month, and $1.39 a year from now.
Some reckon the dollar's decline is not over and the euro may dart up towards $1.50 from around $1.42 on Wednesday, even if it takes a little longer to get there. At the weekend, in New York market, the dollar posted its largest one-day gain against a basket of currencies in more than five months after data showed the United States shed fewer jobs than expected in May, boosting hopes for an economic recovery.
The dollar initially sold off after the jobs report, which showed the US economy shed 345,000 jobs, well below the 520,000 expected by economists. In the past, the dollar had fallen in response to data hinting at improvement in the US economy, with investors moving into riskier assets, including higher-yielding currencies.
OPEN MARKET RATES: On June 1, the rupee lost 20 paisa against dollar for buying at 81.10 and 10 paisa for selling at 81.20. In the meantime, the rupee halted erosion versus the euro, holding its weekend levels for buying and selling at Rs 113.50 and Rs 114.50.
On June 2, the rupee did not budge to any side against dollar for buying and selling at 81.10 and 81.20, while it shed 60 paisa for buying versus euro,at Rs 114.10 and 50 paisa for selling at Rs 115.00. On June 3, the rupee inched up 10 paisa versus dollar for buying at 81.00 and 5 paisa for selling at 81.15. The rupee, however, lost 90 paisa for buying in terms of euro at Rs 115.00 and Re one for selling at 116.00.
On June 4, the rupee gained 30 paisa against dollar for buying at 80.70 and it 25 paisa for selling at 80.90.
The rupee rose by Rs 1.55 versus euro for buying at Rs 113.45 and Rs 1.50 for selling at 114.50. On June 5, the rupee lost paisa against dollar for buying and selling at 80.80 and 81.00. The rupee shed 5 paisa versus euro for buying at Rs 113.50 while it did not show any change for selling at 114.50. On June 6, the rupee firmly held its overnight level versus dollar for buying at 80.80 while it lost 10 paisa for selling 81.10. The rupee managed to recover Rs 1.50 versus euro for buying and selling at Rs 112.50 and 113.50.