The Indian rupee dropped by 27 paise to 44.72 against the American currency in the morning session on persistent dollar demand from banks and importers on the back of higher dollar in overseas amids sustained capital outflows from foreign funds.

At the Interbank Foreign Exchange (Forex) market, the domestic currency opened lower at 44.55/56 as against the overnight closing level of 44.45/46 per dollar and hovered in the range of 44.54 and 44.72 before quoting at 44.67/68 per dollar at 1030hrs.

Sustained dollar demand from banks and importers on the back of firm dollar in overseas market coupled with capital outflows from foreign funds affected the rupee value against the dollar, a forex dealer said.

The US dollar extended gains against major rivals in the Asian market today, including euro, as some analysts viewed European debt problems as the immediate concerns even after ratings agency Standard and Poor’s lowered its outlook on US government credit.

The Indian benchmark Sensex fell by another 108 points or 0.57 per cent in the early trade.

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