New Delhi; Maintaining its aggressive dominance against the beleagured US currency, the rupee powerheaded relentlessly to bask in the glory of abundant capital inflows and ended at a fresh two-year high of 63.58 even as panic dollar unwinding remained unabated.
Stamping its best weekly show this year - the home currency garnered a solid 57 paise against the greenback.
This is the best closing for the Indian unit since July 22, 2015 after briefly climbing 63.55 level.
Besides plunging dollar value, the rupee has a lot of positive factors supporting its outlook at this juncture and is likely to outperform in the region driven by government's economic policy initiatives and heavy capital inflows, a forex trader said.
The current rupee rally has been spurred by sustained foreign fund inflows on expectations of more aggressive reform measures that will boost long-term economic growth against the backdrop of improving macro environment.
Moreover, the equity markets also kept up their good mood, supporting the forex market sentiment.
Foreign funds and investors were pumping money into Indian capital market primarily due to "better prospects" of economic growth as compared to other emerging markets aided by steady progress in monsoon andgood corporate earnings.
Earlier this week, the RBI after a 10-month pause decided to cut the benchmark interest rate by 25 basis points to 6 percent, the lowest in over 6 years.
The apex bank had held its repo rate at 6.25 percent since October 2016.
The dollar has been under intense pressure and hitting fresh lows against all major world currencies and losing fast its most preferred asset tag on a combination of underwhelming US economic data and political uncertainty amid subdued outlook for US rate hike.
At the Interbank Foreign Exchange market, the local unit resumed a tad higher at 64.12 against weekend close of 64.15, but soon retreated to a low of 64.25 amid caution ahead of RBI monetary policy.
Overcoming the initial directionless trade, rupee staged a splendid comeback after the RBI set the platform by lowering the benchmark interest rate.
However, breaching the psychologically significant 64-mark on Wednesday believed to have triggered stop-losses and panic unwinding of long dollar positions, pushing up the currency to hit a fresh high of 63.55 before ending at 63.58, showing a handsome gain of 57 paise, or 0.89 percent.
In the four-straight week, it has surged by 102 paise, while the rupee has appreciated by a whopping 434 paise, taking the year-to-date gains to 6.39 percent.
Meanwhile, country's foreign exchange reserves surged by USD 1.536 billion to touch a fresh life-time high of USD 392.867 billion during the week to July 28, helped by rise in foreign currency assets (FCAs), the RBI data showed.
However, foreign institutional investors (FIIs), who have been positive on Indian for the past five weeks, turned net sellers during the week and offloaded worth USD 236.27 mln in local equities as per provisional exchange data.
The RBI, meanwhile fixed the reference rate for the USD at Rs 63.7091 and Euro at Rs 75.6609, respectively.
In worldwide trade, the U.S. Dollar bounced back with renewed vigour - its biggest one-day gain so far this year against a basket of major currencies and managed to end at a fresh one-week high on Friday bolstered by the release of strong U.S. July payrolls report and comments from National Economic Council director Gary Cohn about lowering the U.S. corporate tax rate.
