Extending losses for the third day in a row, the rupee today eased further by four paise to settle at 51.75/76 against the US currency following weakness in local stocks and sustained dollar demand from importers.
Firming dollar overseas too put pressure on the rupee while capital inflows capped the rupee fall to some extent, a dealer said.
At the Interbank Foreign Exchange (Forex) market, the domestic unit opened slightly lower at 51.75/76 a dollar from previous close of 51.71/72. It later moved in a range of 51.67 and 51.93 before concluding slightly lower at 51.75/76.
The BSE benchmark Sensex closed sharply lower by nearly 389 points, or 2.30%, which mainly weighed on the rupee.
Continued dollar demand from importers, mainly oil refiners, also kept the rupee under pressure.
The dollar index of six major currencies was up by nearly 0.04%, as investors eyed a rate decision from the European Central Bank (ECB) later in the day, as well as the outcome of a summit of European leaders on the sovereign-debt crisis while New York crude oil was trading below $101 a barrel in European market today.
"Looking at the global scenario one can expect rupee to trade over 52.00 levels in coming days and the trading range for the rupee will be 51.40 and 52.00 tomorrow," Pramit Brahmbhatt, CEO, Alpari Financial Services (India) said.