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Tracking weak stock markets, the rupee today closed 13 paise lower against the dollar at 54.41, breaking a three-day winning run, on heavy dollar demand ahead of industrial production and consumer inflation data tomorrow.
The rupee closed in the negative terrain despite capital inflows worth USD 180 million and a sentiment boost from India's exports growing by 4.25% in February, forex brokers said.
At the Interbank Foreign Exchange (Forex) market, the domestic unit resumed lower at 54.42 a dollar from last weekend's close of 54.28 and declined further to a low of 54.52 on initial hesitancy in share markets and dollar demand from importers, mainly oil refiners, and some banks.
However, it later recovered on dollar selling by exporters and sustained capital inflows to a high of 54.17. However, it again fell back at the fag-end in tandem with equities to settle at 54.41 -- a fall of 13 paise or 0.24%.
The rupee gained 64 paise or 1.17% in previous three sessions tracking buoyant stocks markets.
The dollar index was quoting up by nearly 0.1% against a basket of six major global units.
"The rupee was seen reacting to the export import figures for February, which released today. The increase in exports came out as a surprise to the market and it made rupee to gain against the dollar at mid-session. But internationally, the factors were pointing towards weakness in rupee, which led the rupee to close down," said Abhishek Goenka, Founder & CEO, India Forex Advisors.
Meanwhile, the Indian benchmark S&P BSE Sensex in volatile trade closed down by 37.02 points or 0.19%, snapping its straight four-session rally.
Market participants are now waiting for the outcome of the index of industrial production for January and consumer inflation data to be announced tomorrow. The inflation data based on wholesale price index (WPI) for February is likely to be released on Thursday.
According to provisional data from bourses, FIIs pumped in Rs 988 crore (approx. USD 179.5 million) in stock markets today.
"Late weakness in the Sensex also put pressure on the rupee. Going ahead, the focus is shifted to IIP and inflation numbers which are due for this week," Goenka added.
The economic data scheduled for release tomorrow could be a key input for RBI to cut rates in its mid-quarter review on March 19, experts said.
Meanwhile, the premium for the forward dollar remained weak for last few days on continued receipts by exporters.
The benchmark six-month forward dollar premium payable in August declined further to 178-1/2-180 paise from last Friday's close of 180-1/2-182-1/2 paise.
Far-forward contracts maturing in February also finished down at 336-338 paise from 338-1/2-340-1/2 paise.
The RBI fixed the reference rate for the US dollar at 54.2933 and for euro at 70.6107.
The rupee shot up further against the pound sterling to 80.95 from last weekend's close of 81.58 and also improved against the Japanese yen to 56.64 per 100 yen from 56.72.
However, it recovered smartly against the euro to 70.72 from previous close of 71.22.
