Weekly review: Rupee loses steam; ends week with a loss of 19 paise at 64.43 against dollar

The most powerful central bank in the world - the US Federal Reserve announced a quarter-point increase in the target range for the federal funds target range of 1.00 to 1.25 percent.

By Zee Media Bureau | Updated: Jun 17, 2017, 16:11 PM IST
Weekly review: Rupee loses steam; ends week with a loss of 19 paise at 64.43 against dollar

New Delhi: The rupee wavered once again and lost some steam after a brief recovery against the beleagured US dollar as the US Federal Reserve delivered its widely expected rate hike and maintained a hawkish tone going forward.

After tumbling to a three-week low during the mid-week crash, the home currency finally ended with a loss of 19 paise at 64.43 against the greenback.

The most powerful central bank in the world - the US Federal Reserve announced a quarter-point increase in the target range for the federal funds target range of 1.00 to 1.25 percent.

Forex market sentiment turned shaky as currency traders remained cautious, largely impacted by the interest rate hike by the US Fed and its hawkish view to trim balance sheet with one more rate hike during the year.

World financials and currency markets too reacted vehemently to the landmark outcome, ending months of lingering confusion and uncertainty.

However, rboust stockpile of forex reserves and improving macroeconomic environment alongside policy reforms by the Narendra Modi government largely helped the indian currency to withstand the volatility and pressure, a forex dealer said.

Giving a boost to forex trade, the official data showed country's exports rising by 8.32 percent to USD 24 billion in May, though the trade deficit too widened to touch nearly 30-month high of USD 13.84 billion, mainly due to increase in gold imports.

India's imports too increased by 33 percent to USD 37.85 billion in May this year.

In the meantime, affter touching a life-time high, the country's forex reserves marginally declined by USD 11.5 million to USD 381.156 billion in the week to June 9 due to fall in foreign currency assets, the Reserve Bank said.

Foreign funds were net buyers in equities after recent spell of selling and bought USD 679.53 mln as per provisional data from stock exchanges.

The rupee resumed lower at 64.30 from last Friday's closing value of 64.24 at the Interbank Foreign Exchange (forex) market due to bouts of dollar demand amid volatile currency market undertone.

It remained under immense selling pressure most part of the trading sessions in the face of heavy dollar buying from banks and importers.

The local unit tumbled to hit a three-week low of 64.74 on Friday before staging a dramatic and substantial reversal to end at 64.43, showing a steep fall of 19 paise, or 0.30 percent.

The RBI, meanwhile fixed the reference rate for the USD at Rs 64.5883 and Euro at Rs 72.0482, respectively.

In worldwide trade, the greenback took a breather from US Fed-inspired rally as investors turned skeptical following disappointing U.S. Macro data including Friday?s consumer confidence and housing-market reports.

The dollar rallied sharply initialy in response to Federal Reserves' unabashedly hawkish outcome after the US central bank announced a rate hike of 25 basis points for the second time this year and also reiterated its intention to start winding down its balance sheet in 2017, another sign of confidence in the outlook.

With PTI Inputs