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The rupee today retreated from its near three-year high and ended lower by 14 paise at 63.51 against the US currency on fresh bouts of dollar demand amid concerns over the sluggish outlook for economic growth.
Forex market sentiment turned little gloomy after the first advance estimate of GDP growth for 2017-18 showed its slowest in four years to 6.5 per cent, down from 7.1 per cent last year amid lingering effects of demonetisation and GST.
Despite a strong start, the domestic currency succumbed to heavy dollar pressure towards the fag-end of trade.
The rupee climbed to a fresh 3-year high of 63.25 in early trade before retreating, snapping a two-day rally.
Fresh demand for the American currency from banks and importers along with the broad based dollar strength against some currencies overseas put the rupee on backfoot despite a record breaking rally in domestic equities, a forex dealer said.
The rupee resumed high at 63.33 against last Friday’s close of 63.37 on steady dollar amid firm equities.
It later surged ahead to hit a fresh multi-year high of 63.25 in mid-morning deals before slipping back to trade in a narrow range with negative bias.
However, extreme fag-end dollar pressure pushed the rupee to end at the day’s lowest level of 63.51, showing a loss of 14 paise
Meanwhile, the Sensex and Nifty jumped to record closing highs for a second straight session on Monday as pre-budget cheer and optimism over corporate results offset lowered growth forecasts, with the sentiment also boosted by broader world markets hovering near all-time highs
The 30-share BSE index Sensex soared 198.94 points to close at a record high of 34,352.79 and the 50-share NSE index Nifty gained 64.75 points to end at a new peak of 10,623.60.
Against a broad-basket of currencies, the dollar edged 0.3 per cent higher on the day.
“The overall trend is minutely supportive for the US dollar as we are seeing a global recovery led by China and Europe and there is a lot of cash sitting on the sidelines waiting to buy European assets,” said Peter Chatwell, head of European rates strategy at Mizuho International in London.
“The recent trend of dollar-selling is taking a bit of a pause,” said Satoshi Okagawa, senior global markets analyst for Sumitomo Mitsui Banking Corporation in Singapore, adding that the dollar drew some support after US Treasury yields nudged higher on Friday.
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