Extending losses for the seventh straight session, the rupee tumbled sharply by 37 paise to close on Tuesday at nearly 16-month low of 47.59/60 against the US currency on persistent dollar demand from importers and banks.

Dealers said heavy dollar demand from importers and some banks on expectations of further rise in the American unit amid late weakness in local stocks weighed on the rupee.

Looking at the aberrant behaviour of the stock markets globally, investors turned back to dollar as a safe haven, dealers said. Increased capital outflows too affected the rupee value, they added.

In fairly active trade at the Interbank Foreign Exchange (Forex) market, the domestic unit opened higher at 47.11/12 a dollar from last close of 47.22/23 and improved further on initial smart recovery in equities.

But, it fell back on sustained dollar demand and late weakness in stocks to a low of 47.65 before concluding at 47.59/60, showing a fall of 0.78 per cent. The last time, it had settled at 47.70/71 on May 25, 2010.

“The rupee traded weak today, mainly taking cues from global markets where dollar traded strong against the major currencies,” Alpari Financial Services (India) CEO Mr Pramit Brahmbhatt said.

“Looking at the current uncertain global scenario one can expect Rupee to trade near 47.75 levels and the trading range for the USD/INR will be 47.25 to 47.75 tomorrow,” he added.

Dollar index, which was up till afternoon trade, was down by a mere 0.1 per cent against a basket of currencies. Euro fell sharply against the dollar after news that China may not buy Italian debt. Earlier, there was report that Italy had asked China to buy its bonds.

In volatile trading, the BSE Sensex closed down 34 points amid weak global cues on resurgence of Greek debt crisis and fears of a possible downgrade of French banks.

FIIs pulled out $165.96 million yesterday as per SEBI data.

Meanwhile, the New York crude oil was trading above $89 a barrel in European market today.

The rupee premium for the forward dollar remained bearish on sustained receivings by exporters. The benchmark six—month forward dollar premium payable in February dipped to 56-59 paise from Monday’s close of 67-1/2-70-1/2 paise and far-forward contracts maturing in August also closed sharply lower at 88-93 paise from 108-111 paise previously.

The RBI fixed the reference rate for the dollar at Rs 47.0963 and the euro at Rs 64.4222.

The rupee declined further against the pound sterling to end at Rs 75.29/31 from last close of Rs 74.90/92 and also dropped to Rs 65.11/13 per euro from Rs 64.40/42 previously.

It too tumbled against the Japanese yen to Rs 61.86/88 per 100 yen from Monday’s close of Rs 61.30/32.

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