Rupee drops 24 paise to 55.58 on dollar demand

At the Interbank Foreign Exchange (Forex) market, the domestic unit commenced slightly higher at 55.28 a dollar from last Friday's close of 55.34 and immediately touched a high of 55.20 on strong local stocks for the straight second session.

However, the sentiment turned weak soon after on dollar buying by importers, mainly oil refiners, to meet their month-end requirements and also recovery in dollar overseas. Brent crude oil fell under USD 106 a barrel today.

The rupee fell to a low of 55.62 before concluding at 55.58, a fall of 0.43 per cent or 24 paise. In the previous two sessions, rupee had gained 82 paise or 1.46 per cent.

According to provisional data, FIIs -- who have pumped in over Rs 8,400 crore in this month till July 27 -- invested over Rs 900 crore today, capping the fall in rupee.

The dollar index, a gauge of six major global currencies, was up by nearly 0.24 per cent following fall in euro on doubts over the success of the European Central Bank's (ECB) policy actions to protect the Eurozone.

"The rupee turned weak after initial gains in spite of solid gains in Indian bourses mainly tracking weak global currencies. The Italian bond yields didn't put the expected respite raising questions on recent comments of ECB to tackle the debt contagion," said Pramit Brahmbhatt, CEO, Alpari Financial Services (India) said.

The Indian stock market benchmark Sensex, after gaining by over 199 points last weekend, today spurted by over 304 points or 1.81 per cent. (MORE)