Late dollar rush pulls down rupee by 24 paise

In a see-saw trade, rupee on Wednesday pared most of its early gains to close down by 24 paise at 55.63 on emergence of dollar buying at fag-end of trade by importers and banks.

Weak trends in local stocks with Sensex dropping by 129 points also weighed on rupee but some capital inflows limited its decline to some extent, forex dealers said.

At the Interbank Foreign Exchange market, the domestic unit commenced sharply lower at 55.72 a dollar from Tuesday's close of 55.39. Soon after it touched an intra-day low of 55.73 as worries over monsoon aggravated.

Later, rupee managed to bounce back to a high of 55.25 on dollar selling by exporters amid a temporary dollar weakness in overseas markets on reports that Wednesday's release of minutes from US Federal Reserve's June meeting will show the central bank was inclined towards more stimulus measures.

Monetary stimulus measures are generally

considered bad for a country's currency.

However, substantial dollar buying in the last few minutes of trade pulled rupee down to close at 55.63, a fall of 0.43 per cent.

The rupee rallied against the dollar on Tuesday, snapping a four-session losing streak.

Traders said there were no signs of RBI intervention.

FIIs bought (net) stocks worth Rs 84.42 crore on Wednesday.

Dealers also said some Japanese banks sold around $300 million, pulling down the yen-rupee pair, which helped the rupee gain in the initial trade.

"The intra-day appreciation in rupee was mainly on account of dollar selling carried out by some corporate in the local market.

"The rupee is seen trading quite range-bound on account of mixed news coming from local and international markets," said Abhishek Goenka, Founder & CEO, India Forex Advisors.

Experts also said the rupee will closely track India's IIP figures for the month of May that will be released on Thursday.