Mumbai: Retreating after a three-session winning run, the rupee today lost 28 paise to end at 64.56 against the dollar with simmering geopolitical tensions taking the centre-stage at the global level.
A broad-based dollar rally overseas on the back of Fed officials' highly hawkish comments predominantly rattled domestic forex market sentiment amid renewed rate hike fears. This is the biggest single-day fall for the rupee in three months.
The domestic currency was extremely volatile during the trading and touched an intra-day low of 64.58. A fresh demand for the American currency from banks and importers mainly affected the rupee value even as speculative traders reloaded their long dollar positions.
Some caution ahead of key macro numbers -- industrial production (IIP) for February and consumer inflation for March to be released on Wednesday -- also added to the pressure, a forex dealer said. However, robust capital inflows into equities and debt markets restricted the rupee fall.
Meanwhile, maintaining their bullish outlook, FPIs pumped in a staggering USD 2.45 billion in capital markets in the last four trading sessions on the back of improved investor sentiments driven by passage of GST bills.
The home currency opened modestly lower at 64.30 from last Friday's closing value of 64.28 at the Interbank Foreign Exchange on fresh bouts of dollar demand. It kept descending throughout the session to hit a fresh intra-day low of 64.58 before ending at 64.56, showing a steep fall of 28 paise, or 0.44 per cent.
The RBI, meanwhile, fixed the reference rate for the dollar at 64.4418 and for the euro at 68.2503. In worldwide trade, the greenback continued its upbeat trend against its major trading rivals in a flight to safety against the back drop of simmering geopolitical jitters.
Last week's US missile strike on a Syrian airfield fuelled geopolitical tensions, keeping investors worried. The dollar index, which tracks the US currency against a basket of six major rivals, was higher at 101.12.
In cross-currency trade, the rupee fell back against the pound sterling to settle at 80.04 from 79.81 per pound. But, the local unit remained firm against the euro to close at 68.24 compared to 68.33 and also strengthened against the Japanese Yen to finish at 57.99 per 100 yens from 58.07 last weekend.
Meanwhile, country's forex kitty surged by USD 2.02 billion to USD 369.95 billion in the week to March 31 on the back of a steep jump in currency assets.
According to depository data, FPIs infused a net sum of Rs 4,995 crore in equities during April 3-7 and another Rs 10,882 crore in the debt segment, translating into a combined inflow of Rs 15,877 crore (USD 2.45 billion).
Meanwhile, domestic bourses despite a good start succumbed to profit-taking, extending its fall for the third day to touch a nearly two-week low on sustained profit-taking ahead of upcoming Q4 earnings season amid global uneasiness.
The BSE benchmark Sensex tumbled over 130 points to end at 29,575.74, while the broader Nifty fell 16.85 points to 9,181.45. In the forward market today, premium for dollar owing to fresh receivings from exporters.
The benchmark six-month premium for September edged down to 155.5-156.5 paise from 157-159 paise and the far- forward March 2018 contract also moved down to 313-314 paise from 314-316 paise last weekend.
In the global commodity front, crude prices surged sharply to trade above the USD 55 a barrel, largely supported by another shutdown at Libya's largest oilfield and heightened tension over Syria following the US missile strike.
