Rupee snaps two-day rally, down 16 paise at 54.36 vs US dollar

While the US dollar continued to steam ahead, buoyed by jitters over Europe's debt crisis, sustained capital inflows worth USD 50 million from FIIs restricted the rupee's fall to some extent, said forex dealers.

At the Interbank Foreign Exchange (Forex) market, the domestic currency resumed sharply lower at 54.55 a dollar from overnight close of 54.20. It immediately dropped further to a low of 54.67 on heavy dollar demand from importers and early steep fall in local stocks.

Later, rupee recovered on smart rebound in domestic stock market to a touch a high of 54.31 before finishing at 54.36 – still showing a fall of 16 paise or 0.30 per cent. pct. In last two days, rupee had surged by 41 paise or 0.75 per cent.

"The rupee's fall can be attributed to weak global markets and the steep fall in Euro against the dollar," said Ashtosh Raina, Head - Forex Trading, HDFC Bank.

The euro remained under pressure, falling to over USD 1.27, its lowest intraday level since September 7, but was eased a tad higher after reports said the Greek parliament passed USD 17 billion package of extra austerity measures.

Traders said the rupee could not sustain yesterday's momentum today after US equity markets sharply fell.

The dollar index was up by 0.16 per cent

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