The rupee today snapped its two-day upward movement and dropped by 8 paise to close at 55.44 on fresh US dollar demand from importers.

Capital inflows worth Rs 600 crore in stocks, however, helped cushion rupee from a sharper fall, forex dealers said.

The rupee commenced on a strong note at 55.26 a dollar against last weekend’s close of 55.36 at the Interbank Foreign Exchange (Forex) market.

It touched day’s high of 55.25 in line with initial firmness in domestic equities.

The dollar index, after falling to its three-month low against the euro last week, was up today by 0.16 per cent against a basket of six major global currencies ahead of the next policy meeting of the US Fed scheduled for this week.

“The rupee started on a positive note against the dollar and closed on a weaker note. The early gains in rupee were mostly attributed to the poor jobs data from the US and corresponding gains in the Euro. During the closing hours, rupee started depreciating against the US dollar on account of dollar demand by the Indian companies,” Abhishek Goenka, Founder and CEO, India Forex Advisors said.

The rupee is expected to be volatile ahead of important events due in the local and international markets.

The global markets are now looking ahead for major events this week in the form of FOMC meet and German’s Constitutional Court ruling, he added.

Meanwhile, the Indian stock market benchmark Sensex in listless but volatile trade ended up by 17.13 points or 0.10 per cent today.

Pramit Brahmbhatt, CEO, Alpari Financial Services (India) said, “The rupee pared initial gains on slight rebound in dollar index and rising oil importers demand.”

The RBI has fixed the reference rate for the US dollar at 55.3390 and for euro at 70.7425.

The rupee fell back against the pound sterling to 88.62 from last weekend’s close of 88.21 and also turned negative against the Japanese yen to end at 70.80 per 100 yen from 70.12.

The rupee, however, remained weak against the euro to 70.85 from its last close of 70.37.

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