The American currency regained its buoyant strength after a brief sideways movement following overnight US Fed's optimistic tone about the future of the US economy
The rupee, on Tuesday, slipped further to a fresh two-week low of 68.03, plummeting by 16 paise against the American currency, following a sudden rise in the dollar's value against other global currencies.
Sustained dollar demand from importers and corporates alongside heavy capital outflows largely kept domestic unit under pressure for the second straight day.
The American currency regained its buoyant strength after a brief sideways movement following overnight US Fed's optimistic tone about the future of the US economy and also expectations of further rate hikes faster than initially expected.
Fresh geopolitical unease on the back of attacks in Germany and Turkey on Monday also added some amount of volatility in the currency market, a dealer commented.
Foreign Institutional Investors continued their relentless sell-offs in domestic equities and sold worth Rs 535.77 crore, on Monday, as per the provisional data.
The home currency opened a tad higher at 67.86 as compared to Monday's closing value of 67.87 at the Interbank Foreign Exchange (Forex) market and gained further ground to 67.81 on fresh dollar selling by exporters.
However, the rupee trimmed its initial gains and kept drifting to hit a intra-day low of 68.07 late afternoon deals before ending at 68.03, revealing a fall of 16 paise, or 0.24 per cent.
This is the weakest close since December 5 when it had closed at 68.21 against the dollar.
The US dollar index was trading sharply higher at 103.56 in late afternoon.
Meanwhile, the RBI today fixed the reference rate for the dollar at 67.8954 and euro at 70.4686.
In cross-currency trades, the rupee rebounded smartly against the pound sterling to finish at 84.04 from 84.32 and regained against the euro to settle at 70.60 as compared to overnight level of 70.84. It also recouped sharply against the Japanese yen to finish at 57.74 from 57.89 per 100 yens earlier.
Meanwhile, domestic bourses witnessed a heavy selling for the fifth day in a row on the back of sustained profit taking mainly in front-line banking, pharma and auto shares in the face of sluggish global sentiment.
The benchmark Sensex drifted over 66 points to close at 26,307.98, while, broader Nifty shed 21.95 points at 8,082.40.
In the forward market, premium for dollar fell back due to fresh receiving from exporters.
The benchmark six-month premium for May declined to 131-133 paise from 134.5-136 paise and the far-forward November 2017 contract also firmed up to 277-279 paise from 280.5-282.5 paise, on Monday.
On the global commodity front, crude prices traded little changed ahead of the year-end holidays, with investors beginning to unwind positions without expecting to take up new ones until the start of 2017.
Photograph: PTI Photo
