MUMBAI - The Indian rupee finished 1.2% lower for the week, bruised by sustained dollar demand by corporates, despite notching gains on Friday against a softer greenback.
The rupee ended at 82.27 per dollar after touching a session high of 82.0950, against its previous close of 82.42.
The rupee had slumped rapidly since the start of the week to 82.50 and found stability only after the Reserve Bank of India (RBI) sounded a hawkish note on Wednesday after its policy meeting.
Lower crude prices and a weaker dollar have kept oil companies bidding for greenback via state-run banks through the week, private bank traders said.
The rupee was likely to remain rangebound between 82.20 and 82.70 per dollar until the Federal Reserve's rate decision on Dec. 14, traders said, but inflation data at home and the United States due early next week pose risks.
Meanwhile, USD/INR premiums reversed course, with the 1-year implied yield climbing to 1.86% from day's low of 1.66%.
A private bank trader said premiums were tracking an uptick in the USD/INR pair in the later half of the session, adding that volatility in the forwards markets with large moves had become "normal".
On Wednesday, RBI Deputy Governor Michael Patra said forward premiums will rise from their current decade-low levels as "cash dollar shortage was getting alleviated".
Traders have said premiums at current levels were unattractive for exporters and are awaiting clarity on the Fed's terminal rate to gauge where premiums will settle as not many more hikes are expected from the RBI.
In broader markets, Asian currencies gained as the dollar index extended losses on worries over tighter monetary policy inducing an economic slowdown.
(Reporting by Anushka Trivedi in Mumbai)