Caught in a fresh wave of global currency turbulence, the rupee fell sharply by 15 paise to end at 68.83 against the resurgent dollar amid fears of escalation in trade tensions worldwide.
The Indian currency hit a fresh 3-week low in early trade before regaining some lost ground.
Forex market sentiment wobbled once again in line with sell-off in other emerging market currencies hit by the sudden wave of risk-off on mounting fears over a political crisis in Turkey.
The Turkish lira plunged nearly 14% after Turkish President Recep Tayyip Erdogan asked citizens to convert their dollars and other foreign currencies as well as gold holdings to local lira.
US President Donald Trump also announced doubling steel and aluminum tariffs on Turkey, adding to pressure on that country’s troubled economy amid a diplomatic row.
The Reserve Bank of India is suspected to have intervened heavily to curb the rupee’s sharp slide on a day when overseas investors sold local securities leading to fund outflows.
Domestic equity markets witnessed profit-taking after a string of record-setting sessions as Turkish currency rout reverberated through global markets.
Extremely strong US dollar, which continued to enjoy trade wars and a hawkish central bank, predominantly put pressure on the rupee.
Heavy dollar buying interest from importers and banks also weighed on the trading front.
On the energy front, crude prices dropped on growing concerns that global trade disputes will slow economic growth and demand for fuel, but losses were limited by US sanctions against Iran which look set to tighten supply.
The benchmark Brent for September settlement was trading weak at USD 72.60 a barrel in early Asian session.
Earlier, the rupee opened with a steep fall at 68.82 against Thursday’s close of 68.68 at the Interbank Foreign Exchange (Forex) market in the midst of global developments.
The follow-through weakness eventually pulled down the home currency to a fresh 3-week low of 69.03 in early deals on the back of stepped up dollar purchases.
However, suspected currency market intervention by the Reserve Bank of India through state-run banks largely helped the local unit to cut short early steep losses.
It finally closed at 68.83, depreciating by 15 paise, or 0.22%.
The Financial Benchmarks India private limited (FBIL), meanwhile, fixed the reference rate for the dollar at 68.9538 and for the euro at 78.9985.
Against a basket of other currencies, the dollar index spot was trading higher by 0.69% at 96.16.
In the cross currency trade, the rupee however pulled back against the pound sterling to end at 87.86 per pound from 88.53 and the euro also bounced back against the euro to close at 78.83 as compared to 79.61 earlier.
But, the Japanese yen drifted further to settled at 62.03 per 100 yens from 61.81 on Thursday.
Elsewhere, the pound sterling fell sharply against the US dollar to the lowest since June 2017 on a stronger greenback and growing concerns over Brexit deal with the EU.
The euro collapsed to a fresh 13-month low against dollar on concerns about the exposure of some European banks to Turkey’s currency crisis.
The Russian ruble fell to more than two-year lows on concern over fresh US sanctions.
In forward market on Friday, premium for dollar slumped due to heavy receiving from exporters.
The benchmark six-month forward premium payable in December declined to 112.50-114.50 paise from 114-116 paise and the far-forward June 2019 contract moved down to 260-262 paise from 262-264 paise previously.
