Rupee pares early gains, down 4 paise at 64.19 a dollar

The rupee failed to sustain the early strong enthusiasm and ended 4 paise lower at 64.19, the second straight session loss against the US currency on bouts of month-end dollar demand from importers and corporates.

Currency traders also preferred to stay on sidelines and avoided taking any long positions as caution displayed ahead of the Reserve Bank's policy review meet outcome on August 2.

Though, the central bank is expected to lower its key policy rates responding to an inflation rate running well below target, which had eased to its slowest pace in over five years in June.

A small recovery in dollar overseas from fresh multi- month lows also added to the pressure on the domestic currency, though robust capital flows into equities and debt largely cushioned the fall.

The home currency resumed firmly higher at 64.05 from last weekend close of 64.15 at the Interbank Foreign Exchange (forex) market owing to heavy dollar selling by banks and exporters and traded in a tight range most part of the day.

However, the rupee suffered a sudden reversal in late afternoon trade on the back of fresh dollar pressure and drifted back sharply to hit a low of 64.25 before ending at 64.19, showing a loss of 4 paise, or 0.06 per cent.

The rupee on Friday had retreated by 4 paise to end at 64.15 against the US dollar.

The RBI, meanwhile, fixed the reference rate for the dollar at 64.0773 and for the euro at 75.2203.

The US currency crumbled to a near 2-1/2-year low against the euro in early trade, weighed down by US political uncertainty and uninspiring US data that added to doubts about whether there will be another Fed rate hike this year.

The rupee had climbed to a 2-1/2 month high on last Thursday following highly dovish Fed statement.

All major Asian and emerging market currencies were able to rally against the US Dollar last week.

Foreign funds and investors pumped a staggering USD 4 billion into the Indian capital market this month, primarily due to "better prospects" of economic growth as compared to other emerging markets aided by steady progress in monsoon and good corporate earnings.

The latest inflows follow net infusion of Rs 1.6 lakh crore in the preceding five months (February-June).

In the meantime, country's foreign exchange reserves touched a new record high of USD 391.33 billion after it rose by USD 2.27 billion in the week to July 21.

Meanwhile, domestic bourses made a stellar rebound after a brief consolidation phase with both the benchmark indices ending at fresh lifetime highs on better-than-expected corporate earnings and RBI rate cut expectations.

In cross-currency trades, the rupee retreated against the pound sterling to finish at 84.24 from 83.98 per pound and remained weak against the euro to settle at 75.28 from 75.15.

The local unit also dropped further against the Japanese yen to close at 58.07 per 100 yens from 57.66 last Friday.

The dollar index, which measures the greenback against a basket of currencies, was up marginally at 93.33 during Asia trade.

In forward market today, premium for dollar edged higher owing to mild paying pressure from corporates.

The benchmark six-month premium payable in December moved up to 120-122 paise from 119-121 paise and the far forward June 2018 contract also inched higher to 268-270 paise from 265-267 paise.

On the International commodity front, crude prices surged further to mark the strongest month this year, as news of a producers' technical meeting next week added to bullish sentiment driven by the threat of US sanctions against OPEC member Venezuela.

Brent crude futures traded at USD 52.56 a barrel in early Asian trade -- the highest since May 25.

(This article has not been edited by DNA's editorial team and is auto-generated from an agency feed.)