THE RUPEE: mixed pattern

Mixed trend was seen on the currency market as the rupee managed to resist sharp losses in relation to dollar during the week ended on December 18, 2010. On the interbank market, the rupee posted a gain of six paisa in relation to dollar for buying and selling at 85.74 and 85.78.
On the open market, the rupee, however, lost five paisa versus dollar for buying and selling at 85.60 and 85.80.
The local currency recovered 37 paisa in relation to euro for buying at Rs 112.45 and lost 63 paisa for selling at Rs 112.95.
During the shortened week due to Muharram holidays, the rupee performed well as it resisted major losses versus dollar despite high demand for US currency to meet import payments. Besides, healthier trend in the inflows was another adding factor, which played an important role behind the rupee's steadier trend in terms of dollar.
INTER-BANK MARKET RATES: On Monday, the rupee shed three paisa against dollar for buying at 85.83 and four paisa for selling at 85.88.
On Tuesday, the rupee posted a gain of three paisa against dollar for buying and selling at 85.80 and 85.85.
On Wednesday, the rupee did not show any change in relation to dollar for buying at 85.80 while it inched up by one paisa for selling at 85.84.
All commercial centres reopened on Saturday after observing two-day holiday on account of Ashura, and the rupee posted a gain of six paisa versus dollar for buying and selling at 85.74 and 85.78.
OVERSEAS OUTLOOK FOR DOLLAR: In the first Asian session, the euro slipped, looking set to remain in its downtrend, while the dollar edged up, supported by higher Treasury yields after improving US data late in previous week.
Indian rupee tracked euro's losses against dollar and a choppy local stock market failed to provide any clear cues on the direction of foreign fund flows. Traders expected that the rupee would broadly move in a 45.00 and 45.30 band. Malaysian ringgit was trading at 3.1295 in terms of the US currency and Chinese yuan was available at 6.661.
In the second Asian trade, the euro hovered near its high for December against a broadly weaker dollar. One trader said, however, that the euro could struggle to extend its gains much after its jump on Monday triggered a wave of stop-loss buying and forced some traders to lighten their euro short/dollar long positions ahead of the Federal Reserve's policy meeting later on Tuesday.
Monday's sharp moves highlighted the thin and choppy year-end trading conditions that were likely to persist as more and more investors would close their books for the upcoming holidays.
China's yuan closed up against dollar on Tuesday after the People's Bank of China set a higher mid-point in the wake of a nearly 1 percent drop in US dollar index, partly on concerns over a US tax cut deal.
Dealers said the central bank might let the dollar's performance guide the Chinese currency's movements in the near term, but would confine trade to a small range as it wants to control heavy money inflows betting on yuan appreciation and the country's bullish asset markets.
Spot yuan closed at 6.6551 versus dollar, rising from Monday's 6.6670. It rose 2.57 percent since the PBOC announced a depegging in mid-June.
Indian rupee was trading at Rs 45.02 versus dollar and Malaysian ringgit was available at 3.1285 in relation to the US currency.
During the third session, the dollar rose against other major currencies after upbeat US economic data helped to send US Treasury yields higher, while the euro fell after credit rating agency Moody's said it may downgrade Spain's debt.
Moody's put Spain's AA1 ratings on review for a possible downgrade, citing concerns about its mounting debt and 2011 funding needs, sending euro down to test support just below $1.3300.
The euro shed 0.5 percent to $1.3309 and headed down to 1.2808 Swiss francs, within range of a record low of 1.2765 francs set in September.
Indian rupee was trading at Rs 44.95 versus dollar; Malaysian ringgit was available at 3.1340 in terms of the greenback and Chinese yuan was at 6.6573.
In the fourth Asian trade, the dollar maintained upward momentum as investors welcomed strong US economic data and rising Treasury yields, analysts said.
Fiscal worries for troubled eurozone nations weighed on euro and supported the dollar, they added.
The dollar stood at 84.23 yen, unchanged from New York overnight.
The euro stood at 1.3212 dollars and 111.30 yen, nearly flat from 1.3211 dollars and 111.27 yen in New York, where the single European currency plunged on lingering fiscal woes in Europe.
Masafumi Yamamoto, chief foreign exchange strategist at Barclays Bank in Tokyo, told Dow Jones Newswires that dollar might gain further on easing concerns over US deflation and hopes that the US Congress would approve a tax cut bill.
At the week-end, the euro fell against dollar in the NY market and looked set to extend losses after a multi-notch downgrade of Ireland's credit rating overshadowed solid German economic data and underscored the severity of the euro zone debt crisis.
Moody's Investors Service slashed Ireland's credit rating by five notches to Baa1 with a negative outlook from Aa2 and warned further downgrades could follow if Ireland was unable to stabilise its debt situation.
The euro hit a low around $1.3220, with key support seen around $1.3105, its 200-day moving average. A break below could see the currency retest the $1.30 level and slide toward its December low of $1.2970, traders said.
The euro is likely to struggle anew in the current week as markets remained fearful about sovereign debt issues in the peripheral euro zone economies, and investors are well-advised to be short the currency going into 2011.
A five-notch downgrade of Ireland by Moody's and budget warnings by the International Monetary Fund on Friday weighed on the currency and will continue to cloud the euro's near-term outlook.
OPEN MARKET RATES: On December 13, the rupee lost 10 paisa against dollar for buying and selling at 85.65 and 85.85. It, however, gained 22 paisa versus euro for buying and selling at Rs 112.60 and Rs 112.10.
On December 14, the rupee lost five paisa in relation to dollar for buying and selling at 85.70 and 85.90. The rupee came down sharply by Rs 2.10 versus euro for buying and selling at Rs 114.70 and Rs 115.20.
On December 15, the rupee gained 10 paisa in relation to dollar for buying and selling at 85.60 and 85.80. The rupee gained Rs 1.10 versus euro for buying and selling at Rs 113.60 and Rs 114.10.
On December 18, the rupee managed to hold it's pre-holiday levels against the US currency for buying and selling at 85.60 and 85.80. The rupee gained Rs 1.15 in relation to euro for buying and selling at Rs 112.45 and Rs 112.95.