The rupee came off a two-month highand ended four paise lower at 61.27 against the dollar on Friday as fresh demand for the US currency from importers outweighed capital inflows and firm local equities.
At the interbank foreign exchange market, the local currency started on a strong note and touched a high of 60.92 against the dollar. The rupee closed at 61.27, a fall of four paise. It had gained 60 paise, or 0.97 %, yesterday.
"The strength in the rupee was mainly attributed to weakness in the US dollar and sharp gains in the euro," said Abhishek Goenka, CEO of India Forex Advisors.
The rupee shifted between gains and losses after a news report that the Reserve Bank of India is considering closing the forex swap window for oil companies, which the RBI later clarified was still open, Goenka said.
The RBI said in a release that the oil marketing companies swap window remains operational and that any tapering of the facility will be done in a calibrated manner.
The 30-share benchmark Sensex surged 467.38 points, or 2.29 %, to end at a three-year high of 20,882.89. Overseas investors bought a net Rs. 1,752.98 crore of shares today, as per provisional data with the stock exchanges.
The dollar index was down 0.06 per cent against a basket of six major global currencies after US lawmakers reached a deal to temporarily avoid a debt default and end a 16-day partial government shutdown.