The rupee pared its initial gains to close down by 35 paise against the U.S. currency today due to fresh dollar demand from importers and weak domestic equity markets.

Snapping its three-session gaining string, the rupee settled at 49.32/33 a dollar, down by 35 paise over the last close.

At the Interbank Foreign Exchange (Forex) market, the domestic unit opened higher at 48.90/91 a dollar from its last close of 48.97/98 and immediately touched a high of 48.84 due to early rally in local stocks.

Sustained dollar selling by exporters as well as renewed capital inflows also supported the rupee in morning deals.

However, dollar buying by importers and some banks in the later part of the day amid late weakness in local stocks, put pressure on the rupee and it fell back to a low of 49.39 before settling at 49.32/33, a net fall of 0.71 per cent. In last three sessions, it had surged by 62 paise or 1.26 pct.

The BSE benchmark Sensex, which was up by nearly 217 points in early deals, closed down by a mere 20.76 points or 0.13 per cent.

“Late dollar demand from oil importers mainly helped dollar to appreciate over half per cent against Rupee. Local equities traded positively during the day but eventually closed in red,” Pramit Brahmbhatt, CEO, Alpari Financial Services (India) said.

“Strong resistance is seen at 49.50, above which we could see Rupee to trade near 50.00 level and the trading range for the USD/INR will be 48.80 to 49.80 tomorrow,” he added.

The dollar index was down by almost 0.2 per cent against basket of currencies while New York crude was trading above USD 85 a barrel in European market today.

FIIs bought shares worth USD 157.29 million on October 7 and 10, as per SEBI data.

“The local unit had shown some appreciation in morning mainly on the account of some positive signals, related to recapitalisation of banks and debt plan being discussed between IMF, World Bank and ECB, the so called Troika,” Abhishek Goenka, CEO, India Forex Advisors said.

“Along with risk aversion giving strength to the dollar there is also a chronic weakness in the rupee itself,” he added.

The Reserve Bank of India fixed the reference rate for the US dollar at Rs. 49.0333 and for the Euro at Rs. 66.8029.

The rupee premium for the forward dollar also dropped on fresh receivings by exporters. The benchmark six-month forward dollar premium payable in March settled weak at 78-80 paise from Monday’s close of 85-87 paise and far-forward contracts maturing in September too concluded lower at 112-114 paise from 121-123 paise previously.

The rupee fell back against the pound sterling to end at Rs. 77.11/13 from yesterday’s close of Rs. 76.62/64 and also dipped to Rs. 67.09/11 per euro from Rs. 66.54/56 previously. It turned negative against the Japanese yen to settle lower at Rs. 64.36/38 from its last close of 63.84/86.

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