The rupee dropped to 54.30 against the dollar from Monday's close of 54.01. Oil importers continued to pile on the demand for the dollar, which had risen to a 4-month high on Monday, following dollar inflows from foreign institutional investors.

Bulk of the dollar demand comes from oil importers, however, in the next two months there is likely to be a heavy demand from corporates for dollars, following large scale expiry of foreign currency debt. This according to analysts is likely to put pressure on the rupee.

Meanwhile, equities continued to remain firm, with the benchmark indices trading higher, after gaining for eight successive days in a row.

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