Rupee ends tad higher at 66.65 against dollar

The rupee ended a notch higher at 66.65 against the US dollar in an extremely thin and lethargic trade owing to stray dollar selling.

Sentiment remained upbeat aftermath of FOMC meet outcome, though trading reflected a reluctance among currency traders to take any major positions ahead of the weekend.

Financial and currency markets across the globe reacted positively to Fed's monetary stance to keep rates on hold overnight.

Moreover, country's current account deficit (CAD) fell substantially in the June quarter to just $300 million futher kept rupee on the defensive, a forex trader commented.

The rupee opened lower at 66.69 against Thursday's closing value of 66.66 at the Interbank Foreign Exchange (forex) market and drifted further to 66.73 on fresh demand for the American currency from importers and weak local equities.

It largely fluctuated between a high of 66.62 and a low of 66.73 throughout the day, due to uneven dollar demand and supply before ending at 66.65, revealing a mere one paisa gain.

The home currency had soared by 36 paise, its biggest single-day spike in four months, to close at a two-week high of 66.66 on Thursday.

Meanwhile, the greenback staged a smart rebound against all other major currencies in the Asian session after its two-day downside momentum despite a scaling back of rate hike expectations by the Fed and sluggish US macro data outcome.

The dollar was under downward pressure following the Fed s decision to keep its key interest rates unchanged.

The US dollar index, which measures the greenback's strength against a trade-weighted basket of six major currencies, was up 0.05 per cent at 95.36.

Meanwhile, RBI fixed the reference rate for the dollar at 66.6519 and euro at 74.6701.

In cross-currency trades, the rupee recovered sharply against the pound sterling to finish at 86.39 from 87.07 and also recouped modestly against the euro to settle at 74.75 as compared to 74.89 yesterday.

It, too bounced back against the Japanese yen to conclude at 66.13 from 66.22 per 100 yens earlier.

In the forward market, premium for dollar fell further due to sustained receiving by exporters.

The benchmark six-month premium for February slipped to 160-162 paise from 163-165 paise and the forward August 2017 contract also moved down to 3342-344 paise from 345-347 paise on Thursday.

Meanwhile, Foreign institutional investors (FII) continued their buying spree for the third straight session and bought shares worth Rs 336.87 crore on Thursday, according to provisional data released by the exchanges.

The domestic bourses took a breather after a overnight Fed-induced spectacular rally on the back of profit-taking amid investors caution due to steep valuations.

The flagship BSE Sensex slumped by 104.91 points to end at 28,668.22, while broder Nifty shed 35.90 points to 8,831.55.

Crude oil prices fell back on Friday in a sell-off following two sessions of strong rises and on caution ahead of a gathering of OPEC ministers next week in Algeria to discuss possible production cooperation to rein in global oversupply.