Mumbai: Extending losses for the third straight week, the Indian rupee closed the truncated week down by 41 paise to two-month low of 55.16 against the Greenback on tepid domestic economic data amid sustained dollar demand from importers.
Sharp fall in local equities too added fuel to the fire.
The Forex market was closed on November 13 and 14 on account of 'Diwali' holidays.
Poor industrial production data, record-high trade deficit, sticky retail-level inflation and statement given by RBI Governor D Subbarao Friday regarding economic growth and high inflation dashed hopes of key rates cut by the apex bank in the next monetary policy meeting.
At the Interbank Foreign Exchange (Forex) market, the local unit resumed slightly better at 54.68 a dollar from last weekend's close of 54.75 and immediately touched a high of 54.61.
However, sluggish stock markets amid sustained dollar demand from importers, mainly oil refiners, and weak economic datas pulled the rupee down to a low of 55.2050 before ending the week at two-month low of 55.16, exhibiting a fall of 41 paise or 0.75 percent.
In straight three week of losing string, the rupee has slumped by 160 paise or 2.99 percent.
The Indian benchmark sensex, this week, plunged by 374.31 points, or 2.00 percent, mainly affecting the rupee.
India's exports in October contracted 1.63 percent for the sixth month in a row to USD 23.2 billion, while imports grew by 7.37 per cent to USD 44.2 billion, putting pressure on the rupee, a forex dealer said.
As global stock markets took a plunge on risk aversion, investors bet on the US currency, driving up the Dollar Index by 0.29 per cent against a basket of six major rivals.
Pramit Brahmbhatt, CEO, Alpari Financial Services (India) said, "A truncated trading week witnessed a firmer start but gave the gains from the very first day and continued the weakening spree till the last day with some firming sign on the penultimate day.
"The rupee ended the week on weak note displaying bear strength. The week witnessed greater domestic surprises on the economic data front leaving the street surprised.
India's industrial output for September unexpectedly fell 0.4 percent compared to a revised 2.3 percent growth in the previous month against the expectation of expansion by 2.5 - 3 percent.
"The slowing of the growth activity pressured the domestic markets lower also adding to the weight was the widening of Trade deficit which continued to balloon at a faster pace creating additional pressure on INR."
"The positive surprise came from the WPI readings which hit to an eight month low raising the hopes of rate cut by RBI in its upcoming December or January policy meet. A damp squib 2G auction also added to the currency woes as most of the telecom circles didn't even receive adequate bids for auction leaving the government with no other option but to do some homework and go for a second auction," he added.
"For the week Importers can create a partial hedge around the 54.80 - 54.50 levels for their payments and Exporters can use the weakness towards 55.70 - 55.50 levels to initiate short hedge with a stop loss above 56.10 levels as to cover their receipts. The crucial levels for INR appreciation are 54.60 levels and for depreciation the 55.40 levels can be closely watched as rise above 55.40 levels shall weaken the pair till 55.70 levels," he added.
RBI fixed the reference rate for US dollar and euro at Rs 54.9915 and Rs 70.2230 from Rs 54.3400 and Rs 69.4274 last weekend, respectively.
The rupee premium for the forward dollar dropped further on sustained receiving by exporters.
The benchmark six-month forward dollar payable in April settled sharply lower at 144-1/2-146-1/2 paise from last weekend's close of 153-155 paise.
Far-forward contract maturing in October also finished down at 280-1/2-282-1/2 paise from 292-294 paise.
The rupee moved down further against Pound Sterling to end the week at 87.40 from preceding weekend's level of 87.33 and also remained weak against the euro to end at 70.25 from last weekend's level of 69.61.
However, it bounced back sharply against the Japanese yen to close at 67.98 per 100 yen from previous weekend's level of 69.09.