The Indian rupee edged slightly lower against the dollar in early hours on Friday, 17 March 2017, reversing its 4-day climb, as the American currency got some of its lure back among banks and importers.
The dollar's strength overseas weighed, but a higher opening in domestic equities cushioned the impact.
The domestic currency opened at Rs 65.49 against the dollar and registered an intraday high and low of 65.4750 and 65.65 respectively so far during the day.
In the spot currency market, the Indian unit was last seen trading at 65.5775. The rupee had gained 28 paise to close at a fresh 16-month high of 65.41 yesterday after the US Fed stuck to its stance of a gradual approach on future rate hikes.
Domestic benchmark indices extended initial gains and hit fresh intraday high in morning trade as firmness in Asian stocks perked up sentiment. At 10:20 IST, the barometer index, the S&P BSE Sensex, was up 142.28 points or 0.48 percent at 29,728.13.
The Nifty 50 index was up 22.65 points or 0.25 percent at 9,176.35. Nifty scaled a fresh record high. The Sensex hit more than 2-year high.
Reports suggesting that the Goods & Services Tax (GST) Council cleared all legislations required for launching GST regime from July also boosted sentiment.
Overseas, Asian stocks extended previous session's gains. US stocks closed mostly lower yesterday, 16 March 2017, as modest gains in financial stocks failed to offset declines in health care and utilities stocks.
Meanwhile, the US dollar index, which measures the greenback's strength against a trade-weighted basket of six major currencies, eased 0.03 percent to 100.06, heading down more than 1 percent on the week. Overnight, the dollar traded lower after the Federal Reserve failed to adopt a more aggressive outlook concerning the pace of rate hikes this year.
The Federal Reserve on Wednesday, raised interest rates by 0.25 percent to a target range of 0.75 percent to 1 percent but kept its previous forecast of three rate increases this year unchanged, which disappointed investors, who expected four rate hikes in 2017.
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Indian Rupee: Near two year high