The selloff in the rupee accelerated in early trade, with the local unit plunging to a new historic low of 69.13 before recouping losses.
Mumbai: The rupee on Friday staged an impressive rebound from life-time low levels, surging by 21 paise to end at 68.84 against the US dollar on suspected the central bank’s intervention to check volatility in currency markets.
The selloff in the rupee accelerated in early trade, with the local unit plunging to a new historic low of 69.13 before recouping losses.
Suspected intervention by the Reserve Bank of India (RBI) through state-run banks and short-selling of the dollar by some foreign banks predominantly triggered the recovery momentum.
The greenback took a reverse turn and slipped below one-year high after President Donald Trump criticised the Federal Reserve’s interest-rate increases and expressed concerns about strengthening currency, adding that it would put the US at a disadvantage to other economies.
The dollar index, which shows greenback’s strength against a basket of currencies, fell by 0.66 per cent to 94.53 on Friday.
The US dollar has gained more than 5 per cent in the past three months on expectations the US central bank will keep raising interest rates in the coming months.
The Federal Reserve has raised interest rates five times since Mr Trump took office in January 2017.
Forex sentiment turned highly volatile initially tracking the Chinese yuan’s fall to its weakest in more than a year, as a trade dispute between the world’s two largest economies intensified.
Deteriorating domestic macro scenario coupled with global uncertainty shocks could continue to keep the rupee under severe pressure in near term, a forex dealer commented.
Most Asian currencies were trading flat to higher against the dollar.
In the meantime, crude prices were little changed and set for a sharp weekly drop on concerns over oversupply and the ongoing trade conflict between the US and China.
The benchmark Brent was trading at $72.55 a barrel in early Asian trade.
At the Interbank Foreign Exchange (forex) market, the rupee opened marginally higher at 69.01 from overnight record low of 69.05.
But soon tilted to the downside with momentum swinging into the red and collapsed to a life-time low of 69.13 on the back of heavy dollar pressure.
However, the local unit made a strong comeback in mid morning deals after the RBI stepped in by selling dollars to support the rupee.
After regaining session high of 68.82, it finally settled down at 68.84, revealing a steep rise of 0.21 paise, or 0.30 per cent.
For the week, the Indian unit retreated after a brief rebound and depreciated by 31 paise against the US dollar.
The Financial Benchmarks India private limited (FBIL),meanwhile, fixed the reference rate for the dollar at 68.8458and for the euro at 80.3114.
The 10-year benchmark yield, in contrast held steady at 7.79 per cent.
Against a basket of other currencies, the dollar index is sharply down at 94.40.
In the cross currency trade, the rupee lost further ground against the pound sterling to end at 89.80 per pound from 89.69 and drifted further against the euro to finish at 80.25 as compared to 80.05 yesterday. It also weakened against the Japanese yen to close at 61.26 per 100 yens from 61.12.
In forward market today, premium for dollar declineddue to mild receiving from exporters.
The benchmark six-month forward premium payable inNovember edged down to 103.25-105.25 paise from 105-107 paiseand the far-forward May 2019 contract moved down to 252-254paise from 255-257 paise earlier.
