A new poll indicated Donald Trump lead in the US presidential election, which spooked market participants. The uncertainty surrounding the outcome of the Fed’s policy decision later in the day also made financial and currency markets nervous across the globe.
The home currency largely withstood the early volatile momentum on the back of sluggish overseas cues along with smooth dollar supplies following suspected RBI intervention, a forex dealer said.
Adding to the nervousness, S&P today retained India’s rating at ‘BBB-‘ with a stable outlook and ruled out any upgrade in two years, citing weak public finances, shattering the government’s hope of improved credit rating.
S&P had last in September 2014 upgraded India’s rating to stable from negative.
The rupee resumed substantially lower at 66.80 as against Tuesday’s closing level of 66.71 and drifted lower further to hit a fresh intra-day low of 66.86 on sustained dollar demand.
However, the local unit staged a smart recovery in later afternoon deals on the back of adequate dollar supply from banks and finally settled steady at 66.71, showing no change from yesterday’s close.
On the global front, the US dollar retreated sharply against most of the emerging market currencies despite better than expected macro data outcome.
The pound sterling regained some lost ground ahead of tomorrow’s Bank of England rate decision and quarterly inflation report.
The dollar Index, which measures its broader strength against a basket of currencies, was down 0.47 per cent at 97.30 in the afternoon trade.
RBI today fixed the reference rate for the dollar at 66.8294 and euro at 73.9534.
In cross-currency trades, the rupee dropped further against the pound sterling to end at 82.05 from 81.77 and moved down against the euro to finish at 73.97 from 73.37 overnight.
It remained weak against the Japanese yen and closed at 64.52 from 63.55 per 100 yens earlier. .
PTI