Rupee hits fresh 15-month low of 67.32; macro headwinds, crude oil hurt

The embattled rupee on Thursday dropped further by five paise to end at a fresh 15-month low of 67.32 against the American currency on steady dollar demand from banks and importers.

Besides, growing concerns over capital outflows as well as trade deficit worries due to rising crude prices kept forex sentiment highly volatile throughout the day.

Currency traders and speculators also took into account the rise of Middle-East tensions after the decision of US President Donald Trump to withdraw from the nuclear deal with Iran.

During the day, the rupee crumbled to a fresh intra-day low of 67.44 in mid-morning deals before staging a spirited recovery.

It briefly touched a high of 67.24 largely tracking greenback's consolidation bias against most of the major currencies.

Meanwhile, crude prices continued to forge up to multi-year highs as the markets attempted to adjust to looming US sanctions against major producer Iran, which will also threaten third countries which do business there.

Brent crude, an international benchmark, was trading at $ 77.47 a barrel in early Asian trade.

On the global front, the dollar slid lower against a currency basket, as investors took a breather as interest rate differentials continued to drive strength in the US currency.

The Bank of England decided to keep the Bank rate unchanged.

Extending its extreme bearish market stance, the rupee resumed lower at 67.33 from Wednesday's close of 67.27 at the Interbank Foreign Exchange (forex) market.

Heaping under intense pressure, the local unit plunged to hit a low of 67.44.

The home currency regained some upside traction in mid afternoon deals amidst the ongoing bearish move, staging a so far decent rebound to hit a high of 67.22 before sliding back to end at 67.32, revealing a small loss of 5 paise, or 0.07 per cent.

This is the lowest closing for the rupee since February 7, 2017 when it had settled at 67.41 against the US dollar.

The RBI, meanwhile, fixed the reference rate for the dollar at 67.3786 and for the euro at 79.8908.

The yield on the benchmark debt maturing in 2028 edged up to 7.72 per cent from 7.71 per cent overnight.

Meanwhile, domestic equity markets succumbed to modest profit-taking, breaking its three-day winning streak, as wary investors turned cautious and stayed on the sidelines ahead of assembly elections in Karnataka on Saturday.

Asian shares, however moved broadly higher, tracking overnight gains on Wall Street.

The dollar index, which measures the greenback's value against a basket of six major currencies, was down at 92.60.

In the cross currency trade, the rupee dropped further against the euro to end at 79.98 from 79.93 and also fell back against the Japanese Yen to finish at 61.40 per 100 yens as compared to 61.33 earlier.

The local unit, however, rebounded against the pound sterling to close at 91.02 per pound from 91.41 on Wednesday.

Elsewhere, the British pound suffered a big knock against the greenback, plunging after the Bank of England voted to leave interest rates unchanged at 0.50 per cent, as expected by economists and also slashed its forecast for UK economic growth to 1.3 per cent this year from the 1.8 per cent it predicted three months ago.

In forward market today, premium for dollar displayed a mixed trend owing to lack of market moving factors.

The benchmark six-month forward premium payable in September inched down to 100-102 paise from 101.50-103.50 paise, while the far-forward February 2019 contract inched up to 233.50-235.50 paise from 233-235 paise previously.