Mumbai:  The rupee recovered from initial losses in late morning deals to trade at 65.04, still down by 23 paise against the dollar due to strong demand for the greenback from importers and banks.     

The rupee resumed lower at 64.95 per dollar as against yesterday's closing level of 64.81 per dollar at the Interbank Foreign Exchange (Forex) Market.  Later, it fell sharply on heavy dollar demand to 65.16 before paring losses to quote 65.04 at 10.20 hrs.     

The greenback hovered in a range of 65.16 per dollar and 64.95 per dollar during morning deals. Persistent FII outflows and US Federal Reserve rate hike this year is affecting the rupee, a dealer said.     

FPIs withdrew over Rs 1,200 crore on net basis from stock markets yesterday, as per provisional exchange data.  Overseas, the US dollar was largely lower against the basket of currencies in early Asian trade.     

Meanwhile, the BSE benchmark Sensex dropped 255.44 points or 0.79 percent to 32,114.60 at 1050 hrs. PTI