Erasing initial gains, the rupee closed 15 paise down at 49.20/21 on Tuesday against the American currency following late weakness in local stocks amid sustained dollar demand from importers.

Sustained dollar demand in view of it gaining strength overseas put pressure on rupee, while continued capital inflows kept the rupee fall under check, a forex dealer said.

At the Interbank Foreign Exchange (Forex) market, the rupee commenced stronger at 48.91/92 a dollar and rose to a high of 48.8150 on initial rally in equities and sustained buying by Foreign Institutional Investors (FIIs).

However, late weakness in stocks amid dollar demand from importers weighed on the rupee and it fell to concluded at 49.20/21, a loss of 0.31 per cent.

Yesterday, it had fallen by 0.36 paise, or 0.74 per cent.

The BSE benchmark Sensex, which was up by nearly 125 points in late morning trade, closed down by about 85 points, snapping straight five sessions of rally.

The dollar index was up by 0.05 per cent, while New York crude oil was trading above $96 a barrel in European market today.

FIIs continued their buying spree and pumped in $226.85 million yesterday as per SEBI data, taking a total to over $1.41 billion in the year 2012 so far.

The rupee premium for the forward dollar moved up further on sustained paying pressure from banks and corporates.

The benchmark six-month forward dollar premium payable in July inched up to 161-163 paise from Monday’s close of 160-162 paise and far-forward contracts maturing in January also ended up at 274-276 paise from 272-1/2-274-1/2 paise.

The RBI has fixed the reference rate for the US dollar at 48.9150 and for euro at 64.1188.

The rupee dropped against the pound sterling to end at Rs 77.79/81 from overnight close of Rs 77.27/29 and also fell back to Rs 64.54/56 per euro from Rs 64.13/15 previously.

It too eased further against the Japanese yen to Rs 64.09/11 per 100 yen from last close of 64.03/05.

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