The rupee on Tuesday extended its losses for the third straight session and fell by 14 paise to cross 56-level after more than three weeks against the American currency on strong dollar demand from importers and capital outflows.
At the Interbank Foreign Exchange (Forex) market, the domestic currency resumed lower at 56.05 a dollar from last close of 55.97, but immediately recovered to a high of 55.90 on early rise in equities.
However, with FII selling stocks worth Rs 253 crore during the session, the rupee fell back to a low of 56.17.
Continued dollar buying by importers, mainly oil refiners, to meet their month-end requirements also weighed on rupee and it concluded at 56.11, a fall of 14 paise or 0.25 per cent over the previous close.
Rupee has dropped by 99 paise or 1.8 per cent in three days amid global and local negative cues.
"The rupee continued to move lower for fresh intra-day lows tracking weak global cues. The falling PMI numbers from Eurozone has raised recessionary concerns pulling the dollar index back towards the 84.00 levels on risk aversion," said Pramit Brahmbhatt, CEO, Alpari Financial Services (India).
While there are reform expectations from the Indian government, we believe the rupee to remain under pressure on account of global uncertainties, said Abhishek Goenka, Founder & CEO, India Forex Advisors. Rupee may reach 56.50 levels in next few days, he added.
The dollar index, a gauge of six major global rivals, was up by nearly 0.06 per cent and the New York crude oil (WTI) was trading below $88 a barrel in European market on Tuesday.
Meanwhile, the Indian stock market benchmark Sensex on Tuesday, in a narrow movements, closed up by about 41 points or 0.24 per cent.