Rupee pulls away from 2-week high, down 17 paise at 68.62

The rupee fell back sharply from a two-week high, depreciating by 17 paise to end at 68.62 against the US currency on renewed dollar demand from banks and importers even as crude oil hovered near its multi-month lows.

After a short-lived recovery, forex market sentiment once again turned shaky after Fed Chair Jerome Powell's upbeat comments on the US economic outlook triggered a fresh leg of bullish move for the greenback.

The Fed chief's hawkish comments reinforced market expectations of two rate hikes this year even as the dollar move towards its one-year high.

The dollar index, which measures the greenback's value against basket of six major currencies, rose 0.3 per cent to 95.40, close to its one-year high of 95.50.

Sliding global oil prices also did little to lend any support to the domestic currency. The benchmark Brent crude hit a three-month low on rising US crude inventories and highlighted adequate global supply amid concerns over weak demand. Brent futures was trading at USD 71.45 a barrel in early Asian trade.

The rupee opened higher at 68.42 against previous close of 68.45 at the Interbank Foreign Exchange (forex) market on sustained dollar unwinding and firm local equities.

It later strengthened to near two-week high of 68.38 in mid morning deals before slipping back towards the tail-end trade.

A follow-through weakness pulled down the rupee to a low fo 68.65 before ending at 68.62 against an appreciating US dollar, showing a steep loss of 17 paise, or 0.25 per cent.

It had recovered 12 paise yesterday.

The Financial Benchmarks India private limited (FBIL), meanwhile, fixed the reference rate for the dollar at 68.5652 and for the euro at 79.7363.

The domestic bond market also showed volatile trading, while the 10-year benchmark yield held steady at 7.75 per cent.

In the cross currency trade, the rupee however firmed up against the pound sterling to end at 89.39 per pound from 90.39 and edged higher against the euro to settle at 79.72 as compared to 80.16 yesterday.

The local unit also hardened against the Japanse yen to finish at 60.74 per 100 yens from 60.84 earlier.

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

The benchmark six-month forward premium payable in November inched up to 106.75-108.75 paise from 106.50-108.50 paise and the far-forward May 2019 contract also gained to