Mumbai: The rupee witnessed a reversal on Wednesday after three days of gains and ended lower by 13 paise to 66.82 against the American currency following fresh bouts of dollar demand from importers.
Overall sentiment turned gloomy following hawkish comments from Federal Reserve officials overnight rekindled prospect of a rate hike later this month even as a stronger-than-expected quarterly economic growth of India failed to set forex market tone alight.
A smart rebound in greenback overseas post US President Donald Trump’s much-awaited speech also weighed on trade.
In addition to the overwhelming demand for the greenback from corporates and banks, a steep jump in trade deficit also largely impacted the forex trade.
The country’s fiscal deficit touched Rs 5.64 lakh crore at the end of January, 105.7 per cent of the full-year target, mainly due to lower realisation of non-tax revenue.
The government had budgeted a fiscal deficit of Rs 5,33,904 crore for the current fiscal ending March.
India’s economy expanded by 7 per cent in the third quarter of this financial year, belying fears that note ban would have severely impacted economic activity.
The Central Statistics Office (CSO) has retained the growth projection for the current fiscal at 7.1 per cent, as projected in the first advance estimate in January and also marginally revised upwards the GDP estimates for the first and the second quarters to 7.2 per cent and 7.4 per cent, respectively.
The domestic unit resumed lower at 66.73 from Tuesday’s closing value of 66.69 at the Interbank Foreign Exchange (forex) market against the backdrop of overnight developments amid renewed dollar demand.
It remained under immense pressure throughout the day and touched an intra-day low of 66.89 before ending at 66.82, showing a fall of 13 paise, or 0.19 per cent.
Globally, the dollar rallied to multi-weeks high as investors cheered a potential boost from the economic policies of Trump.
The US dollar index was trading firmly higher at 101.88 in late afternoon session.
The RBI fixed the reference rate for the dollar at 66.8482 and for the euro at 70.5716.
In cross-currency trade, the rupee also rebounded sharply against the British pound to finish at 82.42 from 82.87 and bounced back against the euro to settle at 70.36 as compared to 70.68 earlier.
It also recouped against the Japanese Yen to close at 58.76 per 100 yens from 59.43 yesterday. .
Source: News18