Bouts of dollar demand from importers put pressure on the rupee
Sustained dollar sales by exporters and banks on behalf of their clients also boosted rupee sentiment even as the dollar index was marginally up in overseas markets, said traders.
Weak dollar in the overseas market also boosted the rupee value against the dollar, a forex dealer said.
Dealers said besides increased dollar selling by exporters, a higher opening in domestic equity market and yen's gain against the American currency overseas helped the rupee to recover.
The rupee had gained 18 paise to 55.43 against the dollar in Monday's trade.
The US dollar index, which tracks the greenback against a basket of six major currencies, was 0.38 per cent lower at 95.41.
The rupee had gained 90 paise, or 1.34 per cent.
A higher opening in the domestic stock market buoyed the rupee sentiment
Brokers said a weak trend in euro in overseas markets also dampened the rupee sentiment against the US dollar.
Forex dealers said besides dollar's gains against euro in the overseas markets on worsening euro-zone debt crisis amid growing fears that Spain may need a full bailout, a weak opening in the stock market also put pressure on the local unit.
The rupee had ended 47 paise higher at 60.14 against the US currency in the previous session.
Strengthening of the euro against the US dollar overseas also supported the rupee.
Increased demand for the US currency from importers put pressure on the rupee.
In New York, dollar erased most of its losses on last Friday after the euro briefly jumped following more comments from European Central Bank President Mario Draghi about policy options.
Forex dealers said fresh demand for the dollar also put pressure on the rupee.
The rupee had strengthened by eight paise to close at 60.13 a dollar on Thursday, following firm local equities and fresh currency sales by exporters.
The rupee fell to a record low of 59.9350 to the dollar, breaching past its all-time low of 58.98 on June 11.
At the Interbank Foreign Exchange market, the domestic unit resumed lower at 54.42 a dollar from last weekend's close of 54.28 and declined further to a low of 54.52 on initial hesitancy in share markets and dollar demand from importers, mainly oil refiners, and some banks.
The US Fed kept its near-zero benchmark interest rate unchanged.
The rupee had lost 23 paise to end at 54.09 in Tuesday's trade due to month-end dollar demand.
Forex dealers said persistent capital inflows and bearish dollar overseas also boosted the rupee sentiment in Mumbai.
Foreign institutional investors pumped in nearly $60 million (Rs 321.26 crore) into local equities, according to BSE provisional data.
It moved in a range of 54.87 and 55.02 per dollar during the morning deals.
At Forex market, the domestic unit commenced lower at 53.95 a dollar from previous close of 53.81and moved in a restricted range of 53.88 and 54.06 before settling at 53.94, showing a fall of 13 paise, or 0.24 per cent.
The rupee had gained by 57 paise, or 1.04 per cent, in previous two days.
A sluggish dollar movement in overseas markets and continued capital inflows restricted the rupee fall to a major extent, forex dealers said.
Month-end dollar demand from importers mainly affected the rupee value against the dollar, a forex dealer said.
Dealers attributed the rupee's fall to increased demand.
At the Interbank Foreign Exchange market, the rupee resumed stable at its overnight closing level of 54.75 and immediately touched a low of 54.78.
Sustained foreign capital inflows coupled with recovery in the equity market mainly boosted the rupee value against the dollar, a forex dealer said.
With Indian stocks under pressure, the rupee tumbled to a low of 54.89 on emergence of dollar demand from importers and some banks on expectations of further rise in dollar overseas.
At the Interbank Foreign Exchange market, the local unit commenced weak at 54.52 and immediately touched a low of 54.75 on early hesitancy in domestic equities amid sustained dollar demand from importers.
Forex dealers said a higher opening in the domestic equity market and dollar's weakness against other currencies overseas after the US Federal Reserve kept its easing policy unchanged also supported the rupee.
Fresh dollar demand from importers and some banks on the back of smart rise in the US dollar ahead of RBI monetary policy meeting on Tuesday also weighed on the rupee, said forex dealers.
The rupee was hovering in a range of 66.65 and 66.89 in morning trade.
The rupee had lost 23 paise to end at 54.09 in Tuesday's trade due to month-end dollar demand.
Forex dealers said euro's gains against the American currency in the overseas market also supported the rupee.
The rupee resumed lower at 54.37 per dollar as against the last closing level of 54.07 at the Interbank Foreign Exchange Market.
The rupee resumed lower at 54.43 per dollar as against the last weekend's level of 54.22 at the Interbank Foreign Exchange market.
Forex dealers say dollar rose against the euro after the European Union cut its economic growth forecast.
