The rupee struggled hard to resist sharp fall against the dollar in both the open and interbank during the week ended March 1, 2008. In the meantime, the rupee failed to do the same as it fell steeply versus the euro as the single European currency has been hitting the new high versus the dollar in the global market for the last several weeks.
In the interbank market, the rupee lost 37 paisa against the dollar for buying and selling at 62.60 and 62.62. The rupee shed 20 paisa in relation to the dollar for buying and selling at 62.55 and 62.65. Versus the euro, the rupee adopted the same path and lost Rs 2.05 at 94.30 and 94.40.
High demand for dollars by importers, pushed the rupee's value down during the week. In the meantime, it is most likely that the rupee may try to shed its value in the coming days. But, it seems very difficult in the present circumstances as the oil prices heading to cross the new high in the world market. The prices of oil were also increased locally and it may cause further increase in the demand for dollars by the importers as they were covering the forward buying of dollars as a result of continued rise in payment bills, which are widening the trade deficit.
INTER-BANK MARKET RATES: On February 25, the rupee lost 25 paisa against the dollar for buying and selling at 62.23 and 62.25, dealers said. On February 26, the rupee dropped 31 paisa for buying and selling at 62.54 and 62.57.
On February 27, the rupee fluctuated slightly against the dollar for buying and selling at 62.52 and 62.56, respectively. On February 28, the rupee managed to recover from the weakness against the dollar, picking up two paisa for buying at 62.50, and it also gained four paisa for selling at 62.52. On February 29, the rupee rose by five paisa against the dollar for buying and selling at 62.45 and 62.55.
On March 1, the rupee shed eight paisa against the dollar for buying and selling at 62.60 and 62.62, experts said.
WORLD VALUE OF DOLLAR: In the first session, the dollar hovered near a three-week low against the euro, dogged by worries the US economy may fall into recession and by market expectations for the Federal Reserve to lower interest rates more.
The euro was supported after data late last week showed that euro-zone services growth sprang back in February from a 4-1/2 years low, tempering expectations for a near-term rate cut by the European Central Bank.
In the second Asian session, the yen edged as Tokyo shares gave up early gains and fell, prompting some mild selling of higher-yielding currencies that dragged the Australian dollar down from three-month highs. The yen had fallen across the board on Monday after Standard & Poor's affirmed the top-notch credit rating of US bond insurer MBIA Inc, easing some concerns about ailing credit markets and giving a boost to riskier assets like stocks.
In the third Asian session, the dollar hit a record low beyond $1.50 to the euro on Wednesday after surprisingly weak US data and comments by the Federal Reserve's No 2 official reinforced views that the central bank will keep cutting interest rates.
The dollar also hit an all-time low against a basket of currencies after reports showing US consumer sentiment hit a five-year low and consumer expectations slumped to the worst in 17 years, offering more proof the economy may be in a recession.
During the fourth session of the week, the dollar stayed near a record low against the euro in Asian trade after Federal Reserve Chairman Ben Bernanke signalled the central bank is ready to cut interest rates again, dealers said.
The euro was steady at 1.5119 dollars in Tokyo morning trade, close to its all-time high of 1.5144 reached on Wednesday. During the final session, the dollar fell to a three-year low against the yen after weak US data and a warning from Federal Reserve Chairman Ben Bernanke that some small US banks could fail raised expectations for more interest rate cuts. The dollar tumbled to 104.65 yen, its lowest since May 2005, after a slide in the US currency towards the key 105 yen level triggered a wave of stop-loss orders.
In the NY markets, the dollar fell to record lows against the euro and a basket of currencies for a fourth straight day as yet another set of dour US economic data left traders betting on an aggressive Federal Reserve rate cut next month.
A sharp decline in global and US stocks knocked the dollar to an all-time low against the Swiss franc and pushed it to a three-year trough against the Japanese yen. However, short-covering into the weekend halted the dollar's slide against the euro.
OPEN MARKET RATES: On Monday, the rupee fell sharply against the greenback, losing 15 paisa for buying and selling at 62.35 and 62.45. The rupee maintained its week-end level versus the euro for buying and selling at 92.25 and 92.35.
On Tuesday, the rupee lost 25 paisa against the dollar for buying and selling at 62.60 and 62.70 in process of trading. At the same time, the rupee could not maintain its firmness against the euro, falling 30 paisa for buying and selling at 92.55 and 92.65.
On Wednesday, the rupee held its overnight levels against the dollar for buying and selling at 62.60 and 62.70 despite rising demand by the interbank market. While the rupee failed to do so versus the euro, losing 95 paisa for buying and selling at 93.50 and 93.60, dealers said.
On Thursday, the rupee followed the same fashion, gaining 10 paisa against the dollar for buying and selling at 62.50 and 62.60. The rupee, however, failed to follow the same trend versus the euro, shedding 20 paisa for buying and selling at 93.70 and 93.80, dealers said.
On Friday, the rupee maintained its overnight levels against the dollar, picking up five paisa for buying and selling at 62.45 and 62.55, they said. The rupee could not come out of the prevailing weakness against the euro, shedding 40 paisa for buying and selling at 94.10 and 94.20, dealers said.
At the week-end, the rupee shed 10 paisa more versus the dollar for buying and selling at 62.55 and 62.65, they said. The rupee extended its slide against the euro, losing 20 paisa for buying and selling at 94.30 and 94.40, dealers added.