Rupee slumps 11 paise to 66.81 against US dollar

Slump comes on the back of fresh demand for the American currency from banks and importers

The rupee turned shaky after a brief overnight recovery and ended lower by 11 paise at 66.81 against the US dollar on fresh demand for the American currency from banks and importers.

Hardening expectations of an imminent US interest rate hike in March against the backdrop of the central bank's upcoming meet and also Fed Chair Janet Yellen's speech largely kept domestic currency under immense pressure through the day.

The US Federal Reserve is due to come up with the country's economic outlook in Chicago later in the day.

Sluggish domestic equities also added some discomfort for the rupee trade even as global stock rally took a pause after Wall Street retreated overnight from historic highs.

Meanwhile, the dollar traded weak against its major rivals as traders unwound positions after a two-day surge. The US dollar index was trading marginally weak at 102.00 in late afternoon session.

The domestic currency resumed substantially lower at 66.87 from Thursday's close of 66.70 at the Interbank Foreign Exchange (Forex) Market.

It remained subdued throughout the day and mostly traded in a tight range of 66.79 and 66.8850 before concluding at 66.81, showing a loss of 11 paise, or 0.16 per cent.

The domestic unit had ended higher by 12 paise on Thursday.

The RBI fixed the reference rate for the dollar at 66.8354 and for the euro at 70.3509.

In cross-currency trade, the rupee continued to move higher against the British pound and finished at 81.65 from 81.91 and also strengthened against the Japanese Yen to settle at 58.34 as compared to 58.38 earlier.

However, it fell back against the euro to end at 70.44 from 70.22 on Thursday.

Meanwhile, stocks ended marginally lower after recouping from steeper losses initially as investors booked profits for the second straight day amid sluggish global cues.

The benchmark Sensex edged lower by 7.34 points to settle at 28,832.45, while broader Nifty ended a tad weaker at 8,897.55.

In the forward market, premium for dollar declined owing to fresh receivings from exporters.

The benchmark six-month premium for August edged lower to 159.50-161.50 paise from 161-163 paise and the far-forward February 2018 contract also moved down to 316-318 paise from 318-320 paise on Thursday.

On global commodity front, crude prices regained some lost ground on Friday in early Asian trade as weaker dollar encouraged buying but investors remained cautious after Russian production figures showed weak compliance with a global deal to cut output.