The Indian rupee today rose sharply to sub-46 level but pared most of the gains to close higher by only 18 paise against the US dollar.
Forex dealers attributed the initial sharp surge in rupee to firm equity markets, where the Indian benchmark Sensex was up by over 131 points in morning trade on the back of stronger Asian cues.
At the Interbank Foreign Exchange (Forex) market, the local currency resumed higher at 46.04/05 a dollar and touched a high of 45.94 in late morning deals.
However, a sluggish trend after mid-session in equities weighed on the rupee. The bellwether Sensex today ended lower by 103.00 points or 0.59 per cent following weak cues from the European market.
The rupee ended the day at 46.11/12 per dollar from its previous close of 46.29/30. It touched a low of 46.20.
Some dollar buying by importers, mainly oil refiners, to meet their requirements too kept a check on the rupee rise.
Meanwhile, dollar continued to be weak against its rivals in the overseas market.
Global crude oil prices were trading one-year high above USD 80 a barrel in Asian trade today, lifted by a slump in the dollar and rally in the US stock markets to their highest in 12 months.
The Reserve Bank of India, however, fixed the reference rate for the US dollar at Rs 46.04 and for the euro at Rs 68.95.
Rupee premiums on the forward dollar ended lower on fresh receivings by exporters.
The benchmark six-month forward dollar premium payable in March ended weak at 61-1/2-63-1/2 paise from 64-66 paise on last Friday and far-forwards maturing in September also closed down at 143-145 paise from 146-148 paise previously.
In cross-currency trade, the domestic currency remained weak against the pound sterling and the euro, while fell back against the Japanese yen.
The rupee declined further against the pound to end at Rs 75.76/78 per pound from its previous close of Rs 75.49/51 and also moved down further against the euro to Rs 69.10/12 per euro from Rs 68.87/89 previously.
However, it reacted downwards against the yen to end at Rs 50.96/98 per 100 yen from its last close of Rs 50.80/82.