Weekly Review: Rupee posts gains for 2nd-straight week

The rupee finished on a slightly higher note at 64.02 against the US currency, stretching its gains for the second-straight week owing to mild dollar selling even as the country's economic growth lost momentum.

Overall forex sentiment took a heavy beating following the announcement of disappointing real GDP growth which unexpectedly slumped a three-year low of 5.7 percent during April-June amid lingering impact of note ban late last year and also the launch of new GST regime.

Fresh concerns over potential interest rate hike by the US Federal Reserve in the midst of strong macro data amid heavy capital outflows adding to downbeat mood.

Though, the Indian currency showed remarkable resilience and largely shrugged off the high volatility on easing of border tensions between India and China following a diplomatic breakthrough on months-long stand-off.

A strong showing by local equities along with extreme bearish dollar overseas mood also largely weighed on trade.

The home currency climbed to hit a fresh three-week high of 63.85 briefly before succumbing to heavy fag-end selloff.

Meanwhile, the greenback continued its near-term momentum - a broad recovery ahead of US jobs data release and ahead of upcoming FOMC meeting next week.

In the meantime, country's foreign exchange reserves swelled by USD 1.148 billion to a new lifetime high of USD 394.55 billion for the week ended August 25 on the back of a healthy rise in core currency assets.

The total reserves had declined by a marginal USD 211.1 million to USD 393.401 billion in the previous reporting week.

At the Interbank Foreign Exchange market (forex), the local unit opened on a firm note at 63.93 as compared to 64.04 last weekend.

Maintaining its strong upbeat trend, the local unit reclaimed fresh three-week high of 63.85 on sustained dollar unwinding.

But, it later suffered a big setback and retreated sharply to hit a low of 64.06 on final trading day in the face of month-end dollar demand from importers and also impacted by sluggish growth data, before ending at 64.02, showing a small gain of 2 paise, or 0.03 percent.

The RBI, meanwhile, fixed the reference rate for the dollar at 63.9804 and for the euro at 76.1047.