The rupee on Wednesday snapped its three-day string of gains to end at 55.42, down 35 paise against the U.S. dollar on fresh demand of the American currency from importers, notwithstanding robust capital inflows in stocks.
At the Interbank Foreign Exchange (Forex) market, the domestic unit opened lower at 55.14 a dollar from previous close of 55.07. However, it recovered immediately to a high of 54.95 on initial rise in local stock market and persistent dollar selling by exporters.
But with global stocks falling from their intra-day highs on reports of poor economic data from Germany and rating agency S&P revising its outlook on Greece to negative from stable, the dollar strengthened and rupee weakened.
Amid fresh dollar demand from importers, mainly oil refiners, rupee fell to a low of 55.43 before closing at 55.42, down 35 paise or 0.64 per cent over yesterday’s close.
The rupee had spurted by 77 paise or 1.38 per cent in previous three days.
The pressure on the domestic unit will continue as long as European woes continue to persist and today’s poor data from Europe will prove to be bearish for the rupee, said Abhishek Goenka, Founder & CEO, India Forex Advisors.
Forex dealers said although FIIs pumped in over Rs 1,100 crore in stocks today, the pressure on rupee intensified in the second half. The dollar index was up by 0.06 per cent against a basket of currencies after European stock markets displayed weakness in their afternoon deals.
Pramit Brahmbhatt, CEO, Alpari Financial Services (India) said: “The early rise in Indian equities and positive tone of the global currencies during the session imparted some gains in rupee which was very short lived."
Meanwhile, after touching a fresh four-month high, the Indian stock market benchmark Sensex surrendered gains to close flat at 17,600.56 points.