Friday, June 23 2006 11:23 Hrs (IST) - World Time -

Mumbai: The rupee drifted further downwards against the US currency in early trade following heavy month-end dollar demand from oil companies, partly pressured by a likely rate hike by the Federal Reserve.

In active trade at the Interbank Foreign Exchange (Forex) market here, the Indian unit opened lower at Rs 46.19/20 per dollar from overnight close of Rs 46.13/14 a dollar and later fell further to Rs 46.2050/2100 per dollar in late morning dealings in the light of heavy dollar buying.

In the global markets, the dollar is benefited by Yen's weakness attributed to uncertainty over the timing of the Bank of Japan's move away from its zero-interest rate policy.

The dollar also strengthened against Yen on talks that Bank of Japan Governor, who has been criticised over a controversial fund investment, might resign.

"An imminent rate hike by Federal Reserve in its June meeting exerted pressure on the rupee," forex dealers said.

"The dollar's firmness in overseas markets also was seen as negative factor for the rupee," they added.