Rupee drops as dollar demand surges

The partially convertible Indian rupee opened lower on Monday tracking a weak euro, as worries on European debt resurfaced with rising bond yields in Spain and Italy.

The dollar strengthened against the euro and other major currencies. Rupee generally follow the footsteps of Euro, if euro is rising against the dollar, same trend can be visible in the Indian currency as well.

The Indian rupee opened sharply lower at 51.62 to the dollar against 51.30 on Friday. At 10.00 am IST the rupee was seen trading at Rs 51.64, down Rs 0.35.

The rupee which lost 16% in 2011, has recovered smartly since the beginning of the year rising 3.5%. It has not been propped up in any big measure by FII inflows. The last few trading sessions has seen muted to negative FII inflows.

In fact, according to SEBI figures FIIs were net sellers in equities on April 11 and April 12 and bought marginally on April 13.

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