NEW DELHI: The rupee staged a spirited recovery from its life-time low to end higher by a whopping 24 paise at 69.91 against the US currency in a highly volatile week on bouts of dollar selling by exporters and corporates.
After a seemingly endless stream of gloomy news and falling values, sentiment has finally started to show signs of improvement globally against the backdrop of the upcoming visit of Chinese delegates to the US in order to re-ignite trade talks.
Easing contagion risk on emerging-market currencies after last week’s carnage also added a positive vibe on the trading front.
The Indian currency largely withstood the headwinds of surging crude prices and trade deficit worries.
The benchmark Brent crude surpassed the significant $75-mark a barrel once again on re-emergence of a supply shock.
Excess volatility and movements in the US dollar had a major impact on the domestic unit initially.
The rupee got hammered to hit a low of 70.24 before rebounding from a fag-end wallop, snapping a two-week losing streak.
The Indian currency had its most turbulent week in more than two years witnessing record lows after doing little to quell investors’ fears of a prolonged downturn ahead – a shock resembling 2013 currency crisis.
It crashed to a historic low of 70.40 against the dollar last week in the wake of Turkey’s currency crisis.
The rupee had depreciated by a staggering 2.26 per cent, or 155 paise.
The US dollar shed windfall gains scored on the back of haven demand amid turmoil in emerging market assets.
India’s foreign exchange reserves fell by $33.2 million to $400.847 billion in the week to August 17 mainly due to fall in foreign currency assets, according to RBI data.
Meanwhile, foreign investors and funds pumped in over Rs 75 billion into the Indian capital markets so far this month on better corporate earnings coupled with improvement in crude oil prices.
On the energy front, crude prices snapped their seven seven straight weeks of decline – the longest losing streak in three years as supply risk jumped back into the limelight on growing concern over Iranian sanctions cutting off a major supply source.
The benchmark Brent crude surged over $1.02, or 1.4 per cent to end at $75.75 a barrel.
Earlier this week, staging a smart recovery, the rupee sharply higher at 69.83 from last Thursday’s closing value of 70.15 at the inter-bank foreign exchange (forex) market.
The fresh breakout pushed the local unit to hit a high of 69.53 on fresh dollar selling also supported by a strong rally in local equities.
However, succumbing to a mid-week sell-off spooked by global trade war jitters, the rupee retrated sharply to breach the 70-mark once again to touch a low of 70.24 briefly before recuperating all losses to end at 69.91, revealing a sharp gain of 24 paise, or 0.34 per cent.
The RBI, meanwhile, fixed the reference rate for the dollar at 70.1377 and for the euro at 81.1699. The 10-year benchmark yield ended modestly higher at 7.87 per cent. Globally, the US dollar shed windfall gains scored on the back of haven demand amid turmoil in emerging market assets.
The Federal Reserve Chair Jerome Powell comments at the Jackson Hole sent the US dollar lower against all of the major currencies on Friday after he confirmed that steady rate hikes are the best way to protect the US economic recovery, though investors were not impressed.
The euro climbed to its strongest level in three weeks despite persistent rise in Italian yields.
The British pound also extended its recovery but the lackluster rally signals that investors are still worried about Brexit.
The dollar index, which measures the greenback’s value against a basket of six major currencies dropped to 95.08 from 96 earlier.