The rupee surrendered its early
strong gains and ended almost flat at 67.33 against the US currency in a highly volatile trade amid weak dollar cues.
Subdued macro-economic sentiment and continuous outflows of foreign funds coupled with rising geo-political tensions in the Middle-East after the decision of the US President to withdraw from the nuclear deal with Iran largely weighed on the trading front.
The home currency got some respite from the heavy battering it had received in recent weeks from a higher US dollar and surging crude prices, though sentiment remained well within its dominant downtrend.
Earlier, the rupee opened on a strong note at 67.15 against Thursday's close of 67.32 at the Interbank Foreign Exchange (Forex) market on fresh bouts of dollar selling by exporters and banks.
Riding on the improving mood in markets, the local unit strengthened to a high 67.11 before retreating sharply in late afternoon deals.
After touching a fresh intra-day low of 67.38 towards the tail-end trade, the rupee finally settled at 67.33, showing a mere loss of one paisa.
For the week, it depreciated by a steep 46 paise, extending the fall for the straight fifth-week.
The RBI, meanwhile, fixed the reference rate for the dollar at 67.2203 and for the euro at 80.0863.
Bearish dollar overseas predominantly infused positive vibes to trading initially with the rupee hitting an intra-day high of 67.11 in mid-morning deals before sliding back.
Moreover, currency traders and speculators preferred to stay on the sidelines and avoided taking any long positions ahead of the Karnataka election exit polls and inflation data due next week.
Karnataka elections will be held on Saturday and its exit polls will be out on the same day.
In the meantime, the greenback continues its retreat in response to the disappointing US inflation figures on Thursday that showed no progress on core CPI.
On the energy front, crude prices steadied near 3-1/2 year highs as the prospect of new US sanctions on Iran tightened the outlook for Middle East supply at a time when global crude production is only just keeping pace with rising demand.
Brent crude, an international benchmark, was trading at USD 77.33 a barrel in early Asian trade.
Weaker US inflation seems to have reassured investors that the pace of rate hikes won't accelerate, a forex dealer commented.
The yield on the benchmark debt maturing in 2028 inched up to 7.73 per cent from 7.72 per cent overnight.
Meanwhile, domestic bourses staged a spirited rebound after a brief overnight correction as market participants enhanced strategies to beef up their positions in key liquid counter ahead of Karnataka poll amid fading Fed rate hike expectations.
Most Asian stocks also ended higher following Wall Street gains in the previous session.
The dollar index, which measures the greenback's value against a basket of six major currencies, was down at 92.32.
In the cross currency trade, the rupee fell back against the pound sterling to finish at 91.33 per pound from 91.02 yesterday.
The local currency also remained weak against the euro to end at 80.33 from 79.98 and drifted further against the Japanese Yen to close at 61.61 per 100 yens as compared to 61.40 earlier.
Elsewhere, the common currency euro extended gains ahead of ECB President Mario Draghi's speach later on and also supported by weaker greenback.
Meanwhile, the pound sterling made a rebound against the greenback after an aggressive selling on the back of dovish decision by the BOE on Thursday. The BoE played down expectations for a near-term rate increase.
In forward market today, premium for dollar showed a mixed trend owing to lack of market moving factors.
The benchmark six-month forward premium payable in September settled unchanged at 100-102 paise, while the far-forward February 2019 contract edged up to 234-236 paise from 233.50-235.50 paise previously.
Disclaimer: No Business Standard Journalist was involved in creation of this content
