THE local currency market did not observe any development last week amid dull dollar demand and sluggish trading activity ahead of Eid-ul-Azha.

Owing to continued dull demand and easy supply of dollar on the interbank market, the rupee traded rangebound after commencing the week on a stable note.

On Monday, the rupee traded unchanged over the previous week close, changing hands at Rs105.38 and Rs105.40 against the dollar.

The rupee, however, posted a gain against the dollar at Rs105.32 and Rs105.34 on Tuesday.

A similar trend was witnessed in the open market where the rupee staged a sharp recovery against the dollar last week.

Due to low demand for dollar and lack of buying interest the rupee gained pushing the dollar to pre-July 5 levels at Rs106.10 and Rs106.40 on Monday.

The rupee further extended its overnight firmness on Tuesday, with the dollar changing hands at Rs106.00 and Rs106.20.

No major change in the week as market participants make preparations ahead ofEid-ul Azha celebrations.

Against euro, the rupee remained in a narrow range.

It gained 40paisa on the buying counter and 70paisa on the selling counter on Monday, trading at Rs125.20 and Rs126.70 against the prior weekend level of Rs125.60 and Rs127.00.

The rupee, however, failed to hold overnight firmness against the euro on Tuesday slipping to Rs125.75 and Rs127.25 after posting 55paisa loss against the euro.

The rupee has been one of the best performing currencies in Asia for over three years despite the dollar`s sharp appreciation against other currencies.

After remaining stable for over three years, however, the rupee suffered an abrupt fall against the dollar on July 5 when the dollar rose in a single day dealing to Rs108.15/30 from Rs104.90/91 in the interbank market and from Rs106/Rs106.10 to Rs107.50/ Rs108.25 in the open market following a major devaluation after a nine-year cap on the exchange rate.

The rupee has shown a steady trend in the interbank market, trading between Rs105.40/41 and Rs105.32/34 throughout August.

In the open market, the overall forex market sentiments are largely perturbed by the current political uncertainty. At the same time, there is also a fear of devaluation in the near future.

Reportedly, the currency dealers are not importing dollars to meet local currency market demand because of lack of interest shown by currency dealers.

SBP`s forex reserves fell to $14.7 billion in July 2017, and further declined by $0.3bn in the first four weeks of August. Currency experts see the pressure mounting on the exchange rate as reserves fall. •