Snapping a two-session upmove, the rupee on Tuesday weakened by two paise to 54.58 against the dollar due to renewed demand for the US currency from importers and continued capital outflows amid weakness in local equities.

However, a sluggish dollar overseas capped rupee’s fall to some extent, forex dealers said.

The local currency commenced the day’s trade on a firm note at 54.49 against the dollar from yesterday’s close of 54.56 at the Interbank Foreign Exchange (Forex) market.

Later, it hovered in a volatile range of 54.41-54.65 before settling down at 54.56, a fall of two paise over its previous close.

Meanwhile, foreign institutional investors continued exiting Indian stocks and sold shares worth over USD 121.8 million (Rs 664.90 crore) today, according to provisional BSE data.

The dollar index, a gauge of six major global rivals, was down by 0.2 per cent.

Meanwhile, the premium for the forward dollar declined further on sustained receiving by exporters.

The benchmark six-month forward dollar premium payable in September settled lower at 187-189 paise from Monday’s close of 190-192 paise.

Far-forward contracts maturing in March also moved down to 362-364 paise from 364-1/2-366-1/2 paise.

The RBI fixed the reference rate for the US dollar at 54.4613 and for euro at 70.9875.

The rupee recovered slightly against the pound sterling to 83.50 from overnight close of 83.53 while improved further against the Japanese yen to 55.15 per 100 yen from 55.32.

It, however, eased further against the euro to 71.17 from 71.04.

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