The rupee surrendered its early strong gains against the American currency and ended marginally lower by two paise at 68.20 despite dollar outlook remaining lacklustre. Dealers attributed stray dollar buying by some banks on behalf of their clients to meet their import requirements. However, calmer local equities which survived largely unhurt alongside smooth supply of dollars towards the fag-end limited any major fall.
The forex market displayed a remarkable level of volatility reacting to weekend developments after US President Donald Trump’s reaffirmation of his protectionist stance sparked fresh concerns about the impact on Indian currency. Meanwhile, the US dollar bore the brunt of investor displeasure and faced heavy selling pressure on the back of heightened uncertainty about the direction of US fiscal policy, a forex trader commented.
The domestic unit resumed firmly higher at 68.05 from last Friday’s closing value of 68.18 at the Interbank Foreign Exchange (Forex) market and gained further ground to 68.02 on bouts of dollar selling. However, it took a sudden reversal in mid-afternoon trade following heavy dollar demand and plunged to hit a fresh intra-day low of 68.23 before settling at 68.20, showing a small loss of 2 paise, or 0.03 per cent.
Stretching its downtrend for the fourth straight day, it has depreciated by a whopping 25 paise against the dollar. Meanwhile, foreign investors have pulled out over Rs 5,100 crore from the Indian capital market so far this month on lingering concerns over growth slowdown as compared to other emerging markets.The US dollar index was trading sharply lower at 100.34 in late afternoon session.
The RBI fixed the reference rate for the dollar at 68.0843 and for the euro at 72.1498. Underlying rupee sluggishness was reflected in cross-currency trade too with the British pound taking a blow, plunging by 130 paise to 84.91 from weekend level of 83.61 per pound. It also fell back sharply against the euro to end at 73.16 as compared to 72.48 and also retreated against the Japanese Yen to finish at 59.99 per 100 yens from 59.12 earlier.
