New Delhi: The Indian rupee took a hefty blow – plunging sharply to end at a fresh 2-1/2 year low of 64.79 against the resurgent dollar on heightened fears over capital outflows after the US Federal Reserve reaffirmed its intention to hike rates in December amid unsupportive global factors.


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Stamping its biggest weekly fall of the year - the home currency crumbled by a whopping 71 paise, or 1.11 percent.


The US Federal Reserve's historic decision to trim its balance sheet and indicated it was likely to lift interest rates again in December predominantly kept overall forex market sentiment highly nervous and shaky.


Escalating geopolitical tensions in the face of fresh war of words between North Korea and the US also added immense pressure on trading front.


The rupee nosedived to hit a fresh six-month low of 65.16 per dollar on Friday - its lowest intradey level since April 5 before staging a smart rebound.


The Fed turned more hawkish than expected and made formal announcement on Wednesday after its two-day meeting that it would begin normalising its crisis-era stimulus programme into reverse from next month and stick with plans for further rate rises.


The Fed was the first among the major global central banks to announce an extensive asset purchase programme in the wake of the financial crisis of 2007-08.


Moreover, hardening speculation of widening fiscal deficit after government indicated a package of stimulus measures to boost exports and revive falling domestic growth, triggering panic dollar buying from corporates and importers.


Aggressive hedging strategy adopted by currency traders and speculators along with strong dollar demand from importers also weighed on trade.


At the Interbank Foreign Exchange (Forex) market, the local unit resumed marginally higher at 64.05 against last weekend level of 64.08 and advanced further to 63.9950 on initial bouts of dollar unwinding.


But, it witnessed a mid-week reversal on Thursday and succumbed to breakneck selloff to hit fresh multi-month low of 65.16 tracking global developments and massive rout in local equities.


However, suspected intervention by central bank officials through state-run banks believed to have given the currency a lift towards the fag-end of the week, resulting rupee to scale back some early steep looses.


It finally ended at 64.79, revealing a sharp fall of 71 paise, or 0.11 percent.


The rupee has depreciated by 101 paise in two-stragiht week fall.


The RBI, meanwhile, fixed the reference rate for the dollar at 64.9596 and for the euro at 77.7566.


On the global front, the dollar held near its highest level of the month on Thursday after the two-day FOMC meet outcome.


However, the greenback came under renewed selling pressure into the end of the week, especially against the Japanese Yen.


The dollar index a measure of the US currency against a basket of six trade-weighted major rivals rebounded marginally to 91.95 against 91.85 last week.