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The Indian rupee remained under intense selling pressure and witnessed a free fall for the fourth straight week, plunging to hit a fresh lifetime low against the US dollar before managing a small recovery.
Overall, the forex mood broadly undermined on the back of increasing impact of geopolitical threats and concerns on the macroeconomic front.
The government's confidence-building measures to curb the currency volatility also fell short of many investors' expectations, causing heavy sell-off and the local stocks to take a massive plunge.
Trading in an extremely volatile market environment, the bruised rupee ended at 72.20, showing a steep loss of 36 paise.
Panic dollar demand from importers and speculative traders sent the home currency sinking to a historic low of 72.99.
It lost a whopping 229 paise in its four-consecutive weekly slide.
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Although, the domestic currency managed to regain some lost ground, trimming its weekly decline.
The crash came despite the government's recent announcement of a slew of measures to attract more foreign fund inflows into the country.
India -- Asia's third-largest economy -- is facing severe macro challenges and goldilocks economic conditions are now changing fast.
A sharp spike in international crude oil prices weighed on the trading front towards the tail-end session even as the US dollar fell to seven-week lows after Donald Trump announced fresh 10 per cent tariffs on Chinese imports.
The stubbornly high global crude oil prices are opening up a can of worms to heightened inflation risks and likely to disrupt government's fiscal maths along with deteriorating global financial conditions.
Considering that India is a net importer of crude oil, the impact of this imported inflation is expected to be significant.
The upcoming week will bring a Fed's monetary policy meeting, with rates expected to be rising by 25 bps.
The benchmark 10-year sovereign yield, however, fell by 5bps to 8.08 per cent from 8.13 per cent.
In the meantime, crude prices pared gains, following a report that Opec and its allies are considering a coordinated increase in crude production.
The Opec meeting with allies in Algiers is expected to focus on production gains as Iranian sanctions and depletion rates in Venezuela look to force the hand of Opec.
Benchmark brent crude futures settled at $78.80 a barrel for the week.
Meanwhile, India's foreign exchange reserves rose by $1.207 billion to $400.489 billion in the week to September 14 on account of increase in foreign currency assets, according to RBI data.
In the previous week, forex reserves had declined by $819.5 million to $399.282 billion.
Foreign investors and funds pulled out a massive Rs 94 billion ($1.3 billion) from the capital markets in September so far, on widening current account deficit due to a surge in oil prices and depreciating rupee.
The latest outflow comes following a net infusion of close to Rs 52 billion in the capital markets, both equity and debt, last month and Rs 23 billion in August.
Fitch Ratings has upwardly revised its forecast for India's economic growth to 7.8 per cent from 7.4 per cent for the current financial year.
Backtracking a brief weekend recovery trend, the rupee opened with a sharp 66 paise fall to 72.50 against the US dollar at the inter-bank foreign exchange (forex) market.
It quickly extended losses due to heavy speculative sell-off and crashed to hit an all-time low of 72.99, forcing RBI intervention in the currency market and restricting the local unit from breaching the 73-mark.
Anyway, the domestic unit recovered some ground and extended to subsequent trading breakouts.
The pullback, triggered by heavy dollar unwinding from speculative traders and exporters pushed the rupee to hit a near two-week high of 71.70 before giving away its strong gains largely reacting to stock market volatility.
It finally settled the week at 72.20, revealing a loss of 36 paise, or 0.50 per cent.
The Financial Benchmarks India private limited (FBIL), meanwhile, fixed the reference rate for the dollar at 71.8489 and for the euro at 84.6830.
On the global front, the US dollar struggled near 2-1/2 month lows on reduced safe-haven demand amid a switch in investors' view that the Sino-US trade conflict would not lead to an immediate global shock.
Against a basket of other currencies, the dollar index ended lower at 93.
In cross-currency trade, the rupee remained under pressure against the British pound and ended with sharp losses at 95.28 per pound from last Friday's close 94.26 and also dropped against the euro to finish at 84.96 from 84.02.
The home currency, however, strengthened against the Japanese yen to settle at 64.06 per 100 yens compared to 64.22 earlier.
In the forward market, the premium for dollar fell sharply owing to heavy receiving from exporters.
The benchmark six-month forward dollar premium payable in January 2019 slumped to 113-115 paise from 120.50-122.50 paise and the far-forward contract maturing in July also slipped to 271.50-273.50 paise from 278-280 paise.
