Weekly Review: Rupee suffers a big blow; retracts sharply from 2-year high
Overall currency market sentiment witnessed a sudden revival of the elasticity pessimism following renewed dollar strength worldwide.
New Delhi: The resurgent rupee suffered a big blow and retracted sharply from its two-year high during the week as forex market undertone wobbled under turbulence and heightened geopolitical tensions across the region amid global selloffs.
Stamping its biggest weekly fall of the year - the home currency breached the key psychological 64-mark to end at a fresh one-week low of 64.13, showing a steep 55 paise fall against the dollar.
Overall currency market sentiment witnessed a sudden revival of the elasticity pessimism following renewed dollar strength worldwide as better US jobs report triggered a supportive shift in the Fed policy outlook.
Simmering geopolitical tensions against the backdrop of hardening of stand by both the US and North Korea further dampened trading mood.
Consistent unwinding by foreign investors from equities and debt markets against the backdrop of stronger dollar overseas predominantly pressurised the rupee.
Domestic bourses too found the going tough and posted their worst weekly fall in 1-1/2 years, dragged by weak earnings from index heavyweights.
Barring a relief rally on Tuesday, the local currency remained under selling pressure.
In a strong showing, the home currency, which was stuck in a broad range for many months, scripted its biggest rally last week since early 2015 to reclaim fresh multi-year highs.
Rupee bulls are giving up and pointing to break further lower in next few days as markets are shifting into a 'risk off' mindset against the backdrop of geopolitical tensions, a forex dealer said.
At the Interbank Foreign Exchange market, rupee opened sharply lower at 63.71 as compared to 63.58 due to heavy demand for the American unit from importers and corporates.
Struggling to register any meaningful recovery, it later crumbled to hit a fresh low of 64.28 towards the fag-end trade before regaining some lost ground to end at 64.13, revealing a steep loss of 55 paise, or 87 percent.
In the four-straight week, it had appreciated by a whopping 102 paise against the dollar.
Meanwhile, country's foreign exchange reserves touched a new life-time high of USD 393.448 billion after rising by USD 581.1 million in the week to August 4, the RBI data showed.