Snapping its three-day rise, the rupee eased from a 21-month high to end 5 paise lower at 64.16 against the US dollar today on fresh demand for the American currency from importers.
It breached the psychologically crucial 64-mark to touch a fresh intra-day high of 63.97 in early trade. The rupee had soared 15 paise yesterday to close near a fresh 21-month high of 64.11 against the US dollar.
Modest month-end dollar demand from importers along with RBI's tight interventions to check the rupee's volatility largely weighed on the currency market.
At the Interbank Foreign Exchange market, rupee opened firmly higher at 64.05 and strengthened further to hit a high of 63.97 on steady dollar unwinding.
However, after scaling fresh multi-month highs, it suddenly turned volatile and relinquished all initial gains to trade range bound.
It touched a low of 64.17 towards the fag-end trade before ending at 64.16, showing a loss of 5 paise, or 0.08 per cent.
The rupee had appreciated by a whopping 50 paise in the last three days.
The rupee has a lot of positive factors supporting its outlook at this juncture and is likely to outperform in the region driven by government's economic policy initiatives and heavy capital inflows, a forex trader said.
Meanwhile, domestic bourses retreated after scaling historic highs on heavy profit booking and volatility due to expiry of F&O contracts.
Benchmark Sensex slipped over 103 points to end at 30,029.74, while Nifty lost 9.70 points to 9,342.15.
Globally, sentiment turned cautious after US President Donald Trump's long-touted tax plan disappointed investors.
The RBI, meanwhile, fixed the reference rate for the dollar at 64.1141 and for the euro at 69.8908.
In worldwide trade, the greenback gained against the euro after the European Central Bank left interest rates and policy stance unchanged as expected, keeping its unprecedented stimulus in place as inflation remains below target.
The dollar index, which tracks the US currency against a basket of six major rivals, was down 0.05 per cent at 98.79.
In cross-currency trade, the local unit fell back against the pound sterling to finish at 82.75 from 82.26 per pound and also declined against the euro to 69.92 compared to 69.85 earlier.
The local currency, however, advanced further against the Japanese Yen to settle at 57.61 per 100 yens from 57.62 yesterday.
In the forward market today, premium for dollar dropped due to fresh receivings from exporters.
The benchmark six-month premium for September fell to 1335-137 paise from 141-142 paise and the far-forward March 2018 also drifted to 295-297 paise from 303-304 paise on Wednesday.
In the international commodity front, crude prices remained under pressure weighed down by oversupply, but losses were limited by expectations that major exporters would agree to extend production cuts to try to rebalance the market.
The benchmark Brent crude was down 60 cents at USD 51.22 a barrel, down almost 10 percent below this month's peak.
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