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The rupee continued its downtrend for the second-straight day, depreciating by 24 paise to end at 66.92 against the US dollar on sustained demand for the American currency amid nervousness over the outlook for the US monetary policy.
Re-emergence of Federal Reserve interest rate hike alongside aggressive hedging strategy adopted by importers in the wake of implied currency volatility and ahead of key macro data release, predominantly kept home currency under intense pressure.
A massive rout in domestic equities which plunged to its lowest level in 2-1/2 months after a wave of panic selling engulfed across the global financial markets in the face of a marked shift in Fed rate hike expectations and valuation concerns further dented investor sentiment.
The stock market wobble comes after a massive rallying momentum that lifted key benchmark index to an 18-month high recently.
Moreover, the US dollar staged a strong pre-weekend rally on hints that the Fed will raise rates before the end of the year.
At the Interbank Foreign Exchange (Forex) market, the domestic unit commenced sharply lower at 66.88 compared to last Friday’s closing value of 66.68 due to robust dollar demand also impacted by a carnage in local equities.
It suffered a late-morning blow and witnessed a sharp downturn to hit a fresh intra-day low of 66.97 before ending at 66.92, showing a steep fall of 24 paise, or 0.36 per cent.
The home unit briefly touched a high of 66.8525 during the trade.
The rupee is expected to show more jittery and choppy in the near-term as the FOMC meeting approaches, a forex dealer said.
The Fed is next due to meet on September 20-21 to consider changes to US monetary policy.
The US dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was little changed at 95.32.
Meanwhile, the forex market will remain shut tomorrow on account of Bakri Id.
The RBI fixed the reference rate for the dollar at 66.9017 and euro at 75.2176.
In cross-currency trades, the rupee regained some lost ground against the pound sterling to settle at 88.76 from 88.78 and also recovered against the euro to end at 75.07 as compared to 75.15 previously.
But the local currency, fell back sharply against the Japanese yen to close at 65.63 from 64.96 per 100 yens last weekend.
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