Mumbai: Consolidating its strong recovery momentum, the rupee gained further ground against the dollar and ended higher by another 22 paise at 65.28 on sustained unwinding of American currency by exporters and banks.
The spectacular pull back rally was largely overshadowed - highly bullish greeback overseas trend and steady capital outflows.
Overall forex market sentiment witnessed a sudden revival of optimism after government revealed that it will stick to its borrowing and fiscal deficit targets for this fiscal, reiterating the commitment to meet the fiscal deficit target of 3.2 per cent of the GDP.
The rupee came under severe speculative attack recently -- hitting fresh multi-month lows on talks of stimulus package to boost sagging economic growth which slipped to a three-year low of 5.7 per cent in the June quarter,
The home currency plunged to a fresh 6-1/2 month low of 65.89 against the greenback on Thursday. On the other side of the spectrum, the US Dollar traded broadly higher against its major trading rivals in response to the rising optimism following the tax reform proposal by the Trump s administration.
However, foreign institutional investors (FIIs) continued their selling spree and offloaded net equity worth Rs 5,328.46 crore on Thursday from stock markets on Thursday, as per provisional exchange data.
Meanwhile, reversing its initial strong buoyancy, equity markets ended on a flat line due to frantic profit taking at higher levels as investors turned cautious and were unwilling to take heavy bets ahead of a long weekend break.
Benchmark Sensex settled flat at 31,283.72, while Nifty advanced over 19 points to 9,788.60.
At the Interbank Foreign Exchange (Forex) market, domestic currency resumed sharply higher at 65.35 against its overnight close of 65.50 on adequate dollar supply.
It strenghtened further to touch a fresh intra-day high of 65.2350 in mid afternoon deals before concluding at 65.28, showing a steep rise of 22 paise, or 0.34 per cent.
On the weekly basis, it has depreciated by a whopping 51 paise.
The RBI, meanwhile, fixed the reference rate for the dollar at 65.3552 and for the euro at 77.0603.
The forex market will remain closed on Monday in view of Gandhi Jayanti.
The dollar index, which measures the greenback's value against a basket of six major currencies, was little changed at 92.95.
Sensex ends steady, but posts weekly loss
Mumbai: The benchmark Sensex on Friday closed flat as buying by domestic institutional investors and retailers saved the day amid a strengthening rupee.
Much of investors' worries on fiscal deficit receded as a top official laid out the Centre's borrowing plan for the second half of 2017-18, reiterating the government's commitment to meet the fiscal deficit target of 3.2 per cent of GDP.
The beginning of the October futures and options (F&O) series and domestic funds playing ball averted any damage, traders said.
As for market triggers, participants are looking forward to the upcoming RBI policy review slated for October 3-4.
The 30-share index closed marginally higher by 1.24 points at 31,283.72 after some late selling. It had gained 122.67 points in the previous session.
Also, the NSE Nifty ended up 19.65 points, or 0.20 per cent, at 9,788.60 after shuttling between 9,854 and 9,775.35 during the day.
Both the Sensex and the Nifty suffered weekly losses for the third time this month, down 638.72 points, or 2 per cent, and 175.80 points, or 1.76 per cent, respectively.
The rupee appreciation continued against the dollar.
"Market started with a positive note supported by the government's unchanged stance on budgeted borrowing plan and expectation of additional capital spending by PSUs. But volatility emerged towards close as investors started profit booking due to the extended weekend which pared the gains and the market settled on a flat note," said Vinod Nair, Head of Research, Geojit Financial Services.
Participants are set for a long weekend as stock exchanges will remain closed on Monday, that is October 2, on account of Gandhi Jayanti.
Domestic institutional investors net pulled in shares worth Rs 5,196.60 crore on Thursday. But foreign investors chose to stay in the exit lane, offloading shares of Rs 5,328.46 crore on Thursday, provisional data showed.
Auto stocks pulled ahead as the festive season neared, led by Bajaj Auto, M&M, Maruti Suzuki, Hero MotoCorp and Tata Motors, climbing up to 2.34 per cent.
Gains also came in from Bharti Airtel, Adani Ports, Coal India and PowerGrid. Losses in Hindustan Unilever, Wipro, TCS and Dr Reddy's capped the upmove.
The benchmarks played catch-up with the broader market, where mid and small cap indices advanced by up to 1.09 per cent.