Forex: The rupee ended almost flat with negative bias against the American currency on mild dollar demand from importers in the face of firm overseas trend amid calmer market conditions.
Recovering from initial volatility, the home unit settled at 67.08 per dollar compared to 67.07 last weekend, showing a mere loss of one paisa or 0.01 per cent. Trading sentiment was by and large tepid as traders refrained from taking any fresh positions and anxiously awaited the announcement of the next RBI governor.
Robust capital inflows into equities and debts also aided sentiment for the local unit. FIIs continued their equity purchases on expectations strong reforms measures while good monsoon rains bolstered confidence of imminent rate cuts from the RBI to drive growth. Foreign portfolio investors and foreign institutional investors pumped in USD 329.52 millions during the first four days of the week as per Sebi's record.
Though optimism around the local currency eroded slightly ahead of a US Federal Reserve meeting next Wednesday, a forex dealer said. Initially slipping to an one-week low against the US dollar, rupee opened at 67.15 against the last weekend's level of 67.07 at the Interbank Foreign Exchange (Forex) following frantic dollar demand from banks and corporates.
It remained under immense pressure due to lack of market-moving factors and drifted further to hit a fresh low of 67.27. However, the domestic currency staged a resounding comeback, recouping most of its initial losses to hit a high of 67.0525 before settling little changed at 67.08.
On the global front, it was a strong week for the US dollar.
The greenback ended firmly higher against all of the major currencies ahead of the Federal Reserve monetary policy announcements against the back drop of robust US macro data outcome.
Positive labour and housing data lifted expectations that the Federal Reserve might raise interest rates this year and also massive stimulus programme from Bank of Japan. The US dollar index, which measures the greenback's strength against a trade-weighted basket of six major currencies shot-up to a more than four-month high of 97.41, up 0.48 per cent.
The European Central Bank (ECB) late on Thursday decided to maintain its current interest rate level after the Eurozone was largely unaffected by the market shock emanating from the UK referendum.
Meanwhile, the flash PMIs for manufacturing and services out today suggest the UK economy has been hit hard by uncertainty following the EU referendum vote. In the forward market, premium for dollars dropped sharply due to sustained receipts from exporters.
The benchmark six-month forward dollar premium payable in December slumped 174-176 paise from preceding weekend's level of 182.5-183.5 paise and far-forward contracts maturing in June also declined to 371-373 paise compared to 381.5-382.5 paise earlier.
The RBI fixed the reference rate for the USD at Rs 67.1355 and the euro at Rs 74.0303 from last Friday's level of Rs 67.0655 and Rs 74.6037, respectively.
In cross-currency trade, the rupee staged a strong recovery against the pound and settled at 87.90 from 89.70 and also regained against the euro to finish at 73.91 from 74.65 previously.
The domestic unit remained firm against the Japanese currency and ended at 63.22 per 100 yens from 63.34....