Rupee snaps two-day rally, falls 16 p to 54.36

While the US dollar continued to steam ahead, buoyed by jitters over Europe's debt crisis, sustained capital inflows worth $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%. In last two days, rupee had surged by 41 paise or 0.75%. "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 $1.27, its lowest intraday level since September 7, but was eased a tad higher after reports said the Greek parliament passed $17 billion package of extra austerity measures.

Bonds flat in thin volume

Bond yields ended flat on Thursday in choppy trading, with the market likely to remain rangebound ahead of a holiday-shortened week peppered with key

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