Piling on yesterday’s massive loss, the rupee today weakened further by 11 paise to end at a fresh one-month low of 68.33 against the American currency on heavy dollar demand from corporates and importers.
Resurgent greenback against other currencies overseas alongside uninterrupted capital outflows predominantly kept forex market sentiment shaky for the second straight day.
Despite a stellar opening rally, the home currency succumbed to fag-end dollar pressure.
The greenback has gained strength broadly on the back of expectations for a faster pace of rate hikes from the Federal Reserve and increased fiscal spending under the incoming Trump administration.
The rupee today resumed firmly higher at 68.12 as compared to overnight close of 68.22 at Interbank Foreign Exchange (Forex) Market on bouts of dollar unwinding and gained further ground to hit a high of 68.05.
However, the currency suffered a setback in late afternoon deals due to fresh dollar demand and retreated sharply to touch a low of 68.3450 before ending at 68.33, showing a loss of 11 paise, or 0.16 per cent.
This is the lowest closing since December 1, 2016 when it had closed at 68.34.
In worldwide trade, the dollar resumed its rally against a basket of the other major currencies after a brief overnight subdued trade bolstered by rate hike expectations with the non-farm payrolls and the FOMC meeting minutes both scheduled for release later in the week.
The US dollar index was trading sharply higher at 103.50 in late afternoon deals.
The RBI fixed the reference rate for the dollar at 68.0864 and for the euro at 71.3818.
In cross-currency trades, the rupee recovered against the pound sterling to finish at 83.81 from 83.91 and hardened further against the euro to settle at 70.97 as compared to 71.50 earlier. It also bounced back against the Japanese Yen to end at 57.73 per 100 yens from 58.11 yesterday.
Foreign funds remained net sellers and sold shares worth Rs. 260.64 crore yesterday.
Meanwhile, domestic equities staged a modest comeback joining in a global rally on the back of encouraging Chinese manufacturing data.
The benchmark rose 47.79 points to end at 26,643.24, while broader Nifty gained 12.75 points to 8,192.25.
In the forward market, premium for dollar fell due to fresh receiving from exporters.
The benchmark six-month premium for June declined to 142-144 paise from 147.5-149.5 paise and the far-forward December 2017 contract also drifted to 284-286 paise from 290.5-292.5 paise yesterday.
On the global commodity front, crude oil prices shot up on the first trading session of 2017 to retrace the highest level since July 2015 as optimism surrounding the landmark oil output cut agreement between OPEC and several non-OPEC producers underpinned the demand.
The benchmark Brent crude jumped more than 2 per cent to hit a high of USD 58.37 before retreating to trade at USD 55.00/barrel mark.
