In the local currency market, the rupee/dollar parity has shown a stable trend in March despite looming pressure on forex reserves.
Last week, the foreign exchange reserves amounted to $21.795bn down from $22.05bn in the earlier week.
The authorities have maintained the rupee-dollar parity at around 104.80/85 since last year. Reserves had been built largely on a financial account surplus dominated by debt inflows.
However, it seems that the rupee remains overvalued, as per REER, according to the IMF. The forecast shows that the rupee will depreciate to 107-109 against the dollar in 2017.
The rupee appreciated by 0.05pc on the interbank market but depreciated by 2.04pc in the open market during 2016.
Last week on the interbank market, the rupee traded unchanged against the dollar in all the five trading sessions as dollar supply was sufficient to meet the demand.
On the interbank market, the rupee traded unchanged against the dollar in all five trading sessions
It commenced the week on a negative note, inching down by one paisa at Rs104.85 and Rs104.86 in the first trading session against the last closing at Rs104.84 and Rs104.85.
It then traded unchanged against the dollar for four successive days. The parity closed the week flat at Rs104.85 and Rs104.86 for the third consecutive week.
Steadier trend was witnessed in the last trading session. The week ended on a positive note as the rupee inched up by one paisa at Rs104.84 and Rs104.85 in the absence of demand.
During the week, the rupee lost one paisa in the first trading session but managed to recover by the same amount in the last trading session. As a result, the dollar on the interbank market did not depict any change against the rupee on WoW basis.
In the open market, the rupee maintained a firm trend versus the dollar, posting a 10 paisas gain, changing hands at Rs106.30 and Rs106.50 against the weekend’s levels of Rs104.85 and Rs104.86. The parity stayed in a tight band as the rupee remained flat against the dollar at Rs106.30 and Rs106.50 in the second and third trading sessions.
The rupee posted another 10 paisas gain dragging the dollar down to almost three week lows at Rs106.20 and Rs106.40 in the fourth trading session.
In the last trading session, the rupee maintained its overnight firmness against the dollar, closing the week flat against the dollar, trading at Rs106.20 and Rs106.40 for the second straight day.
The dollar in the open market suffered 20 paisas loss against the dollar during the week. However, it did not show any change on week on week basis.
Against euro also, the rupee depicted an upward rising trend, hovering between the high of Rs113.05 and Rs114.55 and low of Rs114.75 and Rs116.25. During the week, the euro suffered a net loss of Rs1.20 against the rupee on week on week basis.
Courtesy by: https://dawn.com/