The rupee commenced higher at 55.44 a dollar from last Friday's close of 55.52 at the Interbank Foreign Exchange Market. Thereafter, it immediately touched a high of 55.41 on early rise in domestic equities amid dollar selling by exporters.
However, the rupee lost momentum and fell back on dollar demand from importers and weakness in local stocks. It touched a low of 55.60 before ending at 55.53, a drop of one paisa over Friday's closing. Last Friday, it had risen by 11 paise or 0.20 per cent.
The dollar index recovered some of the lost ground against its major rivals and was up by 0.03 per cent after Federal Reserve Chairman Ben Bernanke last week hinted at another round of monetary stimulus but offered no details on the timing of any measures.
Pramit Brahmbhatt, CEO, Alpari Financial Services (India) said," The rupee reversed its intra-day gains towards the fag end of the day's session after a dismal performance by the equity markets due to grim economic outlook and range-bound global markets with some positive bias as the US market is closed today for Labour Day."
The rupee also erased its earlier gains on account on weak manufacturing data from the Eurozone, said Abhishek Goenka, Founder & CEO, India Forex Advisors. Earlier in the day, data showed Euro area's manufacturing contracted to 45.10 from 45.3 estimated earlier as per a survey.
Meanwhile, the Indian stock market benchmark Sensex closed lower by 45.16 points or 0.26 per cent while Foreign Institutional Investors (FIIs), pulled out funds worth Rs 60 crore from Indian shares today. (MORE)