The rupee eased on Thursday, weighed down by falling shares, a sluggish euro and demand for dollars from oil importers.
Although the rupee was off early lows the outlook was subdued, traders said.
"There are some inflows supporting the rupee. But the euro has slipped overnight, and the rupee could weaken some more today because of the euro," a trader with a private bank said.
At 10:57 am (0527 GMT), the partially convertible rupee was at 44.1525/1550 per dollar, 0.2% weaker than Wednesday's close of 44.08/09. It had slipped to 44.1725 early, and traders forecast a 44.05-44.20 range for the day.
The euro struggled to find any friends in Asia on Thursday, on renewed fears of contagion in Europe, while the US dollar remained on the defensive as Washington showed no signs of progress in debt agreement.
The index of the dollar against six major currencies was up 0.03% at 74.109 points, and above 73.709 when the rupee closed on Wednesday. The euro was trading at USD 1.4352, compared to USD 1.4449 previously.
Oil refiners are the biggest buyers of dollars in the local market and their demand tends to pick up towards the close of each month when they make import payments.
US oil fell for a second session on Thursday as the United States struggled to reach an agreement on raising the debt ceiling to avoid a default, while the first release of crude stocks in the country unexpectedly boosted inventories.
Indian shares fell more than 1% tracking losses elsewhere in Asia and as investors braced for more monetary tightening to control high inflation in Asia's third-largest economy.
The one-month onshore forward premium was at 24.25 points from 24.75 on Wednesday, while the three-month was at 72.25 points from 75.75 and the one-year was at 239.50 points versus 246.25.
One-month offshore non-deliverable forward contracts were quoted at 44.29, weaker than the onshore spot rate.
In the currency futures market, the most traded near-month dollar-rupee contracts on the National Stock Exchange, the MCX-SX and the United Stock Exchange were at 44.3675, 44.3650 and 44.3700 respectively. The total volume stood at USD 3.04 billion.
