The rupee on Monday weakened by eight paise against the US currency to close at 45.58/59 on a strong dollar demand from importers and weakness in stock markets after surprise rate hike by the Reserve Bank.
Stronger dollar overseas also weighed on the rupee, dealers said.
In lackadaisical trading at the Interbank Foreign Exchange (Forex) market, the rupee trapped in a narrow range of 45.47 and 45.59 before closing at 45.58/59 a dollar, completing its three sessions of losing string.
Some banks were seen buying dollar on behalf of importers to meet month-end import requirements which mainly put pressure on the rupee, dealers said.
Negative turnaround in the domestic stock markets after the RBI raising its short-term lending and borrowing rates (repo and reverse repo) by 25 basis points on March 19 also affected the rupee sentiment, they added.
The benchmark Sensex today ended down by 167.66 points or 0.95 per cent. Most of the Asian indices, except Shanghai Composite, also ended in the red.
Firm dollar overseas against a basket of currencies on worries over the Greece's debt problem too has a negative
impact on the rupee.
Global crude oil prices were trading below $80 a barrel in London on Monday.
According to some dealers, the rupee fall was stem to certain extent by sustained capital inflows and rise in the key short-term rates by the central bank.
The hike in the rates, a month ahead of its annual policy on April 20, will squeeze the liquidity from the system, they added.
The Reserve Bank of India fixed the reference rate for the dollar at Rs 45.49 and for the euro at Rs 61.45.
In cross currency trade, the domestic currency remained firm against the pound and the euro while fell back against the Japanese Yen.
The rupee shot up against the pound to end at Rs 68.30/32 per pound from last weekend's close of Rs 68.93/95 and also rose further against the euro to conclude at Rs 61.59/61 per euro from Rs 61.69/71 previously.
It, however, reacted downwards slightly against the yen to Rs 50.33/35 per 100 yen from its last close of Rs 50.30/32.
The rupee premium for the forward dollar ended steady to better on stray paying pressure banks and corporates.
The benchmark six-month forward dollar premium payable in August settled at 60-61 paise from 59-1/2-61 paise on last Friday and far-forward maturing in February edged up to 124-125 paise from 122-124 paise previously.
