The rupee on Wednesday rose to one-and-a-half-month high of Rs. 53.77 but erased gains to close seven paise down at Rs. 54.21 against the dollar on weakness in domestic equities amid strong dollar overseas.
The dollar demand from importers also weighed on the rupee, while fresh capital inflows restricted the fall to some extent, a forex dealer said.
The rupee resumed remarkably higher at Rs. 53.93 a dollar from previous close of Rs. 54.14 at the Interbank Foreign Exchange (Forex) market and touched a high of Rs. 53.77, level not seen since February 28, 2013, when it had logged a high of Rs. 53.60.
Later, it met with strong resistance on weakness in local equities and dropped to a low of Rs. 54.22 before settling at Rs. 54.21, showing a fall of seven paise or 0.13 per cent.
On Tuesday, it had spurted by 48 paise or 0.89 per cent.
The Indian benchmark S&P BSE Sensex on Wednesday closed down by 13.77 points or 0.07 per cent on steep fall in heavyweight RIL while FIIs pumped in Rs. 591.76 crore on Tuesday, as per provisional data with stock exchanges.
The dollar index was up by a whopping 0.48 per cent against a basket of six major global currencies.
Pramit Brahmbhatt, CEO, Alpari Financial Services (India) said: “Rupee traded volatile today, in the first session it traded strong against the dollar and had a gap up opening taking cues from the local equities which opened positively but during the day it lost its way and managed to close near yesterday’s close.
“But as the day progressed Rupee depreciated taking cues from the strong dollar. Support for USDINR (Spot) pair is at 53.80 below which we can see further downfall; the trading range for the same is expected to be within 53.80-54.40.