Rupee remains exhausted for fourth straight week

New Delhi: The Indian rupee remained exhausted for the fourth straight week due to sustained dollar demand from importers and corporates against the backdrop of greenback's overseas strength.

It settled with a modest loss of 4 paise to 67.96 after briefly breaching the key psychological 68-mark.

Sentiment was mainly hit had by the dollar surging to multi-year highs against a basket of major global currencies on better prospects for a series of US interest rate hikes.

The rupee's first week of 2017 has proven very volatile and choppy with a dramatic swing to rebound from an one-month low.

Frantic overseas investment outflows from the country in the midst of robust demand for the American unit from from multinational companies and oil importers largely kept home currnecy under immense pressure.

Sluggish local equities alongside uninterrupted capital outflows also weighed on the rupee trade.

Starting the first trading day of the year on a weak note at 67.95 from last Friday's closing value of 67.92 in an extremely quiet trade at the Interbank Foreign Exchange market, the domestic currency fell sharply to hit an one-month low of 68.3450 on Tuesday in the face of impulsive dollar buying.

However, rupee a made dramatic reversal from its early volatility predominantly helped by less hawkish FOMC minutes and also unwinding of long positions by speculative traders with currency retracing a fresh high of 67.76 during the mid-week trade.

But later retraced the bulk of its early solid gains following suspected intervention by the apex bank to prevent the rupee's surge against the dollar in the interest of exporters and ended at 67.96, showing a modest loss of 4 paise, or 0.06 percent.

It has depreciated by a whopping 54 paise in the last four-week slide.

Hardening optimism about the health of the US economy and expectations of further interest rate rises from the Federal Reserve helped push the dollar to a 14-year peak.

The dollar index ? a measure of the US currency against a basket of peers ended at 102.17 after climbing a high of 103.82 on Tuesday.

In the meantime, rupee finished the year-2016 with a 2.68 percent annual fall, scripting its sixth-consecutive years of decline against the greenback.

A large part of the outperformance was attributed to heavy capital outflows during the fag-end of the year, although it rebounded after plunging to historic lows.

Hedge funds and overseas investors have pulled out a massive USD 4 billion from the Indian capital market in December following rate hike by the US Federal Reserve.

With PTI Inputs