The Indian rupee extended last week's downtrend against the US dollar on Monday, falling back to below the key 55.0 level for the first time since March 4. The rupee reached as low as 55.1405 against the greenback, its weakest level since January 8. Further bullish extension could lead the rupee re-testing the 55.20 support level.
The dominating factor at the moment is the strengthening of the U.S. dollar as signs of an improving U.S. economy led to speculation that the Federal Reserve is close to winding down its massive bond-buying program earlier than expected. Indian shares reversed direction to end modestly lower as the rupee weakness prompted traders to take some profits off the table following recent sharp gains.
The benchmark 30-share Sensex hit a high of 20,444 early in the session before reversing direction to end down 62 points or 0.31 percent lower at 20,224. The broader Nifty index breached the psychological level of 6,200 to hit a 31-month high before erasing early gains to end at 6,157, down 30 points or 0.49 percent from its previous close.
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