Rupee recovery fizzles out, down 4 paise at 64.78 vs USD

Mumbai: The rupee turned weak once again after a brief recovery against the US currency and ended lower by 4 paise at 64.78 Wednesday on fresh demand for the dollar from banks and exporters amid geopolitical uneasiness.

A firming trend in domestic stock markets, however, capped the rupee's fall to some extent.

Possible repercussions of North Korea's latest missile test continued to reverberate across Asia and emerging-market currencies, adding some volatility.

Heavy capital outflows along with buoyant dollar sentiment overseas in the midst of impending Fed rate hikes predominantly put the domestic currency on the back foot, forex dealers said.

Extending its overnight recovery momentum, the rupee resumed higher at 64.70 from Tuesday's closing value of 64.74 at the Interbank Foreign Exchange (Forex) market on bouts of dollar selling and strengthened further to 64.67 as the session moved on.

But, the domestic currency later retreated sharply to hit an intra-day low of 64.87 in mid-morning deals and traded in a tight range most part of the day before ending at 64.78, revealing a loss of 4 paise, or 0.06 per cent.

It had regained 14 paise yesterday against the greenback.

The RBI, meanwhile, fixed the reference rate for the dollar at 64.7209 and for the euro at 73.5035.

Foreign portfolio investors (FPIs) sold shares worth a net Rs 834.36 crore yesterday, as per provisional data.

Domestic equities today made a modest comeback at the close after a volatile range-bound session on the back of buying in front-line bluechip counters, though gains were capped due to some profit-taking technology stocks.

While, Asian bourses managed to end in positive zone despite rising North Korea tensions.

On the global front, the US dollar edged slightly higher against the other major currencies on Wednesday following upbeat US manufacturing data which reinforced expectations for another rate hike by the Federal Reserve this year.

The dollar index, which tracks the US currency against a basket of six major rivals, was up at 96.20.

In cross-currency trades, the rupee regained ground against the pound sterling to finish at 83.67 from 83.70 per pound and hardened further against the euro to settle at 73.41 from 73.42 earlier.

The local currency maintained its rising trend against the Japanese yen to conclude at 57.04 per 100 yens from 57.21 yesterday.

In forward market today, premium for dollar declined further owing to sustained receivings from exporters.

The benchmark six-month premium payable in December slipped to 141-143 paise from 143.50-145.50 paise and the far forward June 2018 contract also moved down to 285-287 paise as against 289-291 paise.

On the International commodity front, crude prices remained under modest selling pressure on Wednesday, pulled down by another rise in OPEC supplies despite a pledge to cut production, though geopolitical tensions in the Korean peninsula and the Middle East put a floor under prices.

Brent crude futures, the international benchmark for oil prices, were at USD 49.55 per barrel in early Asian trade.