Indian Rupee showed much resilience and managed to stand on a strong foot against the dollar despite a massive sell-off in local bourses

Reversing its two-straight weeks of downtrend, the rupee ended virtually stable at 65.17 against the US dollar in a highly volatile trade even as uncertainty over U.S. President Donald Trump’s proposed tariffs dominated the headlines.

The Indian rupee had a turbulent week and witnessed a roller coaster ride, reaching fresh one-week highs only to tumble down. Though, it showed much resilience and managed to stand on a strong foot against the dollar despite a massive sell-off in local bourses.

Highly bullish economic data releases were largely overshadowed by the much anticipated aggressive tightening policy by the Federal Reserve. Consistent capital outflows from foreign funds against the backdrop of highly volatile domestic stock markets largely weighed on the rupee front.

Overall, forex sentiment has been negative in the wake of rising protectionism and developments in foreign exchange and other financial markets.

Meanwhile, global mood improved gradually on fading trade war fears in the midst of optimism for a potential easing of tension spurred by a possible meeting between US President Donald Trump and North Korea’s Kim Jong Un.

At the Interbank Foreign Exchange (forex) market, the rupee resumed higher at 65.10 from last Thursday’s close of 65.17 on the back of good dollar supply. It later touched a fresh one-week high of 64.86.

Expectations of robust capital inflows into the country due to political stability, especially in the wake of BJP’s strong showing in the country’s North East region ahead of the national election in 2019, predominantly supported the Indian unit initially.

But, the local unit succumbed to intense selling pressure towards the tail-end trade and toucned a low of 65.19, relinquishing all early strong gains. The rupee finally settled unchanged at 65.17 against the US dollar. It depreciated by a staggering 96 paise in last two-week fall.

In the meantime, country’s foreign exchange reserves rose by USD 167.8 million to USD 420.758 billion in the week to March 2 on an increase in core currency assets, the Reserve Bank of Indiasaid. On the other hand, Foreign investors pulled out over Rs 11,000 crore from Indian stocks in February, making it the largest outflow in five months, primarily due to better opportunities in other emerging markets.

In the international energy front, global crude prices rebounded from two days of declines on falling US oil rig  count, while investors also grew hopeful that a planned meeting between U.S. President Donald Trump and North Korea’s Kim Jong Un could ease geo political tensions.

Brent crude futures settled at USD 65.59 a barrel. On the global front, the greenback showed little reaction despite the U.S. economy having added the largest number of jobs in more than 1-1/2 years in February, asslowing wage gains indicated only a gradual increase ininflation this year.Elsewhere, BoJ and the European Central Bank both left monetary policy unchanged as widely expected.

The dollar index, which measures the greenback’s value against a basket of six major currencies, was up at 90.11 ascompared to 89.95 previously.