Rupee drops 2.5 paise against US Dollar

Rupee had gained by ten paise in the earlier two sessions following robust FII inflows into the buoyant economy.

The Rupee on Friday closed at Rs 44.45/46 per dollar, a 2.5 paise fall from Thursday's close of Rs 44.42/43 and a steep decline from early peaks of Rs 44.35/37 per dollar.

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Late dollar demand from oil corporates and suspected central bank dollar buying intervention weakened the Rupee, preventing a possible sharp extended rally on the back of sustained FII inflows and a sliding dollar overseas.

Rupee had gained by ten paise in the earlier two sessions following robust FII inflows into the buoyant economy.

The Rupee underwent a downward correction after rising crude oil prices fuelled heavy dollar demand from oil corporates. Suspected dollar-buying intervention by the Reserve Bank of India (RBI) also arrested a sharp rally after the Rupee hit highs of 44.35/37 in early deals, dealers said.

Oil prices shot up to USD 63.50 a barrel in late Asian trade due to geo-political supply concerns.

State-run banks normally buy/sell dollars at the behest of the RBI to curb excessive volatility in the currency markets and to prevent sharp swings either-way.