Rupee snaps 3-day winning spree, drops 29 paise against dollar

The Indian rupee snapped three-day gain in a row and dropped by 29 paise on Monday to close at 49.22/23 against the greenback following distinctly weak local stocks amid fresh dollar demand from importers.

Firm dollar overseas too weighed on the rupee while increased foreign fund inflows in equities restricted the rupee fall to certain extent.

At the Interbank Foreign Exchange (Forex) market, the domestic unit resumed slightly lower at 48.97/98 a dollar from last weekend's close of 48.93/94 and immediately touched a high of 48.94.

Later, in line with sustained weakness in local equities, the rupee also continued to decline and touched a low of 49.3050 before concluding at 49.22/23, showing a fall of 0.59 per cent. In last three trading sessions, it had appreciated by 37 paise or 0.75 per cent.

Extenting losses for the fourth straight session, the benchmark Sensex on Monday plunged by a massive 478 points or 2.67 per cent, mainly putting pressure on the rupee.

Renewed dollar demand from importers, mainly oil refiners, to meet their month-end needs also kept the rupee under stress. The New York crude oil on Sunday touched a nearly 10-month high on concerns over the Iran's nuclear programme and now was trading above $108 a barrel.

The dollar index was up by almost 0.2 per cent against a basket of currencies ahead of the outcome of an approval of a bailout package to Greece as German is going to vote for this later in the day.

However, foreign institutional investors (FIIs) pumped in over $1.5 billion on last Friday according to Sebi data, taking a total to over $7.1 billion in 2012 so far.