Negative bias against dollar weighs on rupee, ends low at 70 paise

Mumbai: The rupee ended little changed with negative bias against the US dollar despite the rollercoaster ride it endured during the highly volatile week asssociated with political chaos.

Overall forex market sentiment witnessed a near-term turmoil after a sense of panic and disbelief rippled through currency trading after initial trends suggested that the ruling BJP was lagging behind in Gujarat election results.

The home currency suffered a day of wild swings on Monday, tumbling over 70 paise for its biggest intra-day fall of the year before a similarly steep rebound. It touhed a low of 64.74 and a high of 63.94 on intra-day levels.

The Indian currency largely withstood initial wobble and staged a spectacular rebound after poll results showed that the BJP is set to keep power in Gujarat and topple the Congress in Himachal Pradesh, proving a big relief.

Besides, heavy dollar unwinding by speculative traders and exporters further supported the rupee recovery. A record breaking rally in domestic equities along with heavy capital inflows too weighed on the trade.

In the meantime, Foreign institutional investors turned net buyers to the tune of USD 237.16 mn in domestic equities this week. Country's foreign exchange reserves rose by USD 488.2 million to USD 401.385 billion in the week to December 15, due to rise in foreign currency assets, a RBI data showed.

In global commodity trade, crude prices ended at their highest levels since 2015 on pledges from OPEC leader Saudi Arabia and non-OPEC Russia that any exit from crude output cuts would be gradual.

Brent crude futures, the international benchmark for oil prices, ended the session up 35 cents at USD 65.25 a barrel, its highest close since June 2015.

Globally, the US dollar ended lower against most of the major currencies on the back of an unexpected downward revision in Q3 GDP, but still the fastest pace of growth since the first quarter 2015 amid fading tax cut excitement.

The US Senate has approved the most sweeping overhaul of the US tax system in more than three decades affecting businesses, individuals and families.

At the Interbank Foreign Exchange (forex) market, the rupee resumed lower at 64.15 from last Friday's close of 64.04 on fresh bouts of dollar demand.

It later nosedived to hit an intra-day low of 64.74 on panic dollar buying before making a smart recovery touch a fresh 3-month high of 63.94 before settling with a mere loss of one paisa at 64.05.

The RBI fixed the reference rate for the USD at Rs 64.0409 and euro at Rs 75.8821, respectively.