Ending its two-day rally, the rupee today closed down by 4 paise at 66.75 per dollar due to fresh demand for the US currency from corporates and banks amid capital outflows from stock markets.
Forex market sentiment remained cautious and witnessed lethargic trade as currency traders preferred to stay on the sidelines against the backdrop of pre-US election jitters alongside confusing signals from the Federal Reserve.
Heavy capital outflows in the midst of an impending US central bank rate hike amid global volatility largely kept rupee momentum under check.
Traders are nervous at this juncture ahead of the vote on November 8, particularly after recent polls showed Donald Trump gaining ground on Hillary Clinton and the rupee is expected to trade under pressure, a forex dealer commented.
Meanwhile, domestic bourses ended at a near 4-month low as pre-US poll woes continued rattle investors mood.
The 30-share Sensex declined 80.91 points or 0.29 per cent to 27,446.31, while NSE Nifty fell 29.05 points to 8,484.95.
Foreign investors withdrew Rs 706 crore on net basis from stocks, as per provisional bourse data.
The rupee today resumed a tad lower at 66.72 from Wednesday's closing value of 66.71 at the Inter-bank Foreign Exchange (forex) market.
But, it staged a remarkable recovery in late morning deals to touch a high of 66.67 following adequate dollar supplies and also supported by weak dollar overseas.
However, the home unit lost momentum in late afternoon trade and slipped to hit a low of 66.77 before settling at 66.75, showing a loss of 4 paise, or 0.06 per cent.
It had appreciated by 16 paise in last two-day rally.
The RBI today fixed the reference rate for the dollar at 66.6942 and euro at 74.1506.
In cross-currency trades, the rupee continued to slide against the pound sterling and finished at 82.88 from 82.05, but recovered against the euro to end at 73.87 from 73.97 yesterday. It remained subdued against the Japanese yen and closed at 64.68 from 64.52 per 100 yens.
In the forward market, premium for dollar displayed an easy to steady trend owing to lack of market moving factors.
The benchmark six-month premium for April edged lower to 174.5-176.5 paise from 175.5-177.5 paise, while the forward-October 2017 contract inched up to 350.5-352.5 paise as against 350-352 paise yesterday.
Crude prices regained some lost ground from its five week lows underpinned by concerns about supply disruptions following a militants attack on a Nigerian oil pipeline amid growing doubts over the proposed OPEC deal to cut production, reports said.
Foreign funds remained net sellers and sold shares worth
Rs 260.64 crore yesterday.
Meanwhile, domestic equities staged a modest comeback joining in a global rally on the back of encouraging Chinese manufacturing data.
The benchmark rose 47.79 points to end at 26,643.24, while broader Nifty gained 12.75 points to 8,192.25.
In the forward market, premium for dollar fell due to fresh receiving from exporters.
The benchmark six-month premium for June declined to 142-144 paise from 147.5-149.5 paise and the far-forward December 2017 contract also drifted to 284-286 paise from 290.5-292.5 paise yesterday.
On the global commodity front, crude oil prices shot up on the first trading session of 2017 to retrace the highest level since July 2015 as optimism surrounding the landmark oil output cut agreement between OPEC and several non-OPEC producers underpinned the demand.
The benchmark Brent crude jumped more than 2 per cent to hit a high of USD 58.37 before retreating to trade at USD 55.00/barrel mark.
