Re drops 13 paise to 55.66 on dollar demand; falls for 2nd day

A stronger dollar overseas amid choppy trading in local shares too weighed on the rupee sentiment, forex dealers said.

The rupee opened strong at 55.40 a dollar from overnight close of 55.53 at the Interbank Foreign Exchange (Forex) market and immediately touched a one-week high of 55.37 on early dollar sales by exporters.

The sentiment, however, turned negative and the rupee fell to a low of 55.70 on sudden dollar demand from importers, mainly oil refiners, and hopes of more capital outflows in near future.

It later closed at 55.66, a fall of 13 paise or 0.23 per cent over yesterday. This is the second straight day of losses. Traders said if it were not for Rs 300 crore of FII inflows in stocks today, the rupee would have plunged further.

Pramit Brahmbhatt, CEO, Alpari Financial Services (India) said," The rupee reversed its initial gains on late dollar demand from importers after rise in global crude oil prices and the rebound in dollar index."

After pulling out USD 26.26 mln on August 31, Foreign Institutional Investors (FIIs) sold shares worth USD 8.49 mln yesterday as per Sebi data.

Meanwhile, the Indian stock market benchmark Sensex recovered its initial losses and closed up by over 56 points or 0.32 per cent on buying in select bluechips. (MORE)