Rupee weakens 2 paise on strong dollar demand

An agent at a money changing outlet in Bangalore counts U.S. dollar notes as rupee notes lie on a desk. The rupee on Monday closed down by 2 paise at 49.45/46 against the U.S. currency. File photo

In a see-saw trade, the rupee on Monday closed down by 2 paise at 49.45/46 against the U.S. currency due to strong dollar demand from importers and weak stock markets.

FIIs pulled out over $490 million in last two days of the preceding week, which also put a pressure on the rupee.

The domestic unit opened lower at 49.60/61 a dollar from previous close of 49.43/44 at the Interbank Foreign Exchange (Forex) market. It touched a low of 49.80 in late morning deals in line with sluggish local stocks.

Dollar demand from importers and some banks amid firm dollar overseas at initial stages weighed on the rupee.

The rupee bounced back later to a high of 49.32 on some recovery in share values and fresh dollar selling by exporters on expectations of another intervention by the apex bank at the rupee’s lower level as like last Friday, a dealer said.

It then again fell back to end at 49.45/46, still showing a fall of a 2 paise.

The BSE benchmark Sensex, which was down by over 360 points in early trade, recovered losses partly but still ended lower by 111 points.

The dollar index, which was up in early stages against, was down by nearly 0.2 per cent against its major rivals while New York crude oil was trading above $80 a barrel in European market on Monday.