Rupee struggles at 9-month low on forex outflow fears

The rupee remained in a tight spot and continued to slide against the US dollar, with the domestic currency ending lower by 9 paise at 68.25 -- its lowest level in nine months -- on heightened capital outflows.
A smart rebound in local equities alongside soft dollar overseas sentiment even failed to arrest the fall.
However, suspected RBI intervention largely curbed sharp rupee volatility.
Heavy demand for the American currency from importers and banks mainly weighed on the domestic unit, forex dealers said.
Foreign portfolio investors (FPIs) sold heavily on Indian stocks overnight worth a net Rs 1,310.82 crore after a massive unwinding of Rs 18,840 crore last week due to the surprising currency depreciation.

Most Asian currencies have been battered by the stunning rally in US dollar in the wake of Donald Trump's unexpected win in the US presidential election and hardening expectations of a Fed rate hike this year.

The American dollar was propelled by a sharp rise in US yields.
At the Interbank Foreign Exchange (forex) market, the local currency resumed modestly higher at 68.13 as compared to Monday's closing value of 68.16 and gained further ground on largely tracking firm equities and a weak dollar overseas.
But it failed to maintain early gains and gradually drifted lower to hit a fresh intra-day low of 68.2650 during the late afternoon deals due to fresh demand for the dollar before ending at 68.25, a loss of 9 paise, or 0.13 per cent.

The unit had seen similar level in February when it had closed at 68.42 on February 29.
In worldwide trade, the greenback retreated from a six-month high against the yen on Tuesday during the Asian session along with other major commodities-linked currencies.
The dollar Index (DXY), which tracks the buck against a basket of its peers was quoted higher at 101.03 in the afternoon trade.
Meanwhile, RBI today fixed the reference rate for the dollar at 68.2317 and euro at 72.4348.
In cross-currency trades, the rupee retreated sharply against the pound sterling and finished at 85.01 from 84.14, but recovered against the euro to settle at 72.62 from 72.79 yesterday.

Earlier, the dollar opened lower as investors awaited the
minutes of the Federal Reserve's latest meeting for clues as to the pace of interest rate hikes, while the euro nursed losses and remained pressured by European political woes.
Meanwhile, US oil prices stayed at a 19-month high on Wednesday after OPEC leaders affirmed that the supply cut effort by heavyweights producers was making headway.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in April traded at USD 54.52 a barrel in the Globex electronic session. US crude prices closed up 55 cents at USD 54.33, the best closing level in more than a year.

Meanwhile, the benchmark Sensex gained by another 103.12 points, or 0.36 per cent, to close at 28,864.71 today.
In forward market today, premium for dollar eased on mild receivings from exporters.
The benchmark six-month premium payable in July edged down to 142-144 paise from its previous level of 145-147 paise and far forward January 2018 contract also declined to 297-299 paise from Monday's closing level of 298-300.
The RBI fixed the reference rate for the dollar at 66.9644 and for the euro at 70.5403.
In cross-currency trades, the rupee finished higher against the pound sterling at 83.30/32 from 83.46/48 and euro also rose against the Euro to settle at 70.29/31 from 71.10/12.

The domestic currency eased against the Japanese Yen to 59.24/26 per 100 yen from 59.17/19 previously.