The rupee failed to hold its early gains and ended lower by 5 paise to close at an over one—week low of 68.18 as the dollar gathered strength ahead of the US Presidential inauguration.
A massive sell-off in domestic equities spooked by series of weak corporate earnings predominantly weighed on trade and kept pressure on the Indian currency.
Extreme nervousness ahead of Trump’s inaugural speech and uncertainty over the economic impact of his fiscal policies further dampened forex market sentiment despite a strong start to trade, forex dealers said.
Meanwhile, the greenback maintained its firmness against major trading partners amid growing economic optimism ahead of the inauguration of US President—elect Donald Trump.
It also found support late Thursday after Federal Chair Janet Yellen said the central bank should continue to raise interest rates, but slowly.
The local unit resumed on a strong footing at 68.07 as against last close of 68.13 at the Interbank Foreign Exchange (Forex) market and gained further ground to 68.0225 following fresh dollar selling.
But, sustained dollar demand from importers and banks triggered immediate resistance with the currency sliding back to hit an intra—day low of 68.23.
It finally settled down the day at 68.18, revealing a nominal fall of 5 paise, or 0.07 per cent, stretching losses to a third day. The rupee’s closing level today was the lowest after January 11, when it ended at 68.32.
In the meantime, China’s gross domestic product (GDP) grew 6.8 percent on—year in the fourth quarter, slightly beating expectations and signalling growth was stabilising.
The US dollar index was trading higher at 101.34 in late afternoon session.
The RBI fixed the reference rate for the dollar at 68.0883 and for the euro at 72.7319.
However, in cross-currency trade, the rupee staged a smart recovery against the British pound to finish at 83.61 from 83.93 per pound and hardened further against the euro to end at 72.48 as compared to 72.59 earlier.
It also firmed up further against the Japanese Yen to conclude at 59.12 per 100 yens from 59.41 yesterday.
Rupee hits over 1—wk low against buoyant US dollar
