In line with local equities, the rupee on Wednesday dipped for the third straight session and eased by two paise to close at fresh two-month low of 62.78 against greenback on sustained demand for US dollar from importers.
Continued slide in local equities amid fresh withdrawal of funds by foreign portfolio investors (FPIs) also weighed on the rupee while some dollar selling by exporters helped the rupee to cushioned the fall, forex traders said.
At the Interbank Foreign Exchange (Forex) market, the Indian rupee resumed lower at 62.83 a dollar from Tuesday's close of 62.76. It moved in a range of 62.69 and 62.87 before ending at 62.78, showing a loss of two paise or 0.03%.
In three days, it has lost 62 paise.
"The Indian rupee has fallen over the last six sessions against the Dollar as the Greenback holds onto gains amid expectations of mid-year U.S. Fed rate hike. Investors continue to believe that Fed will adopt a hawkish stance at the upcoming policy meeting. The only thing limiting the fall is selling from exporters and other corporates," said Suresh Nair, Director, Admisi Forex India.
The dollar index, consisting of six major global rivals, was up by 0.77%. In the New York market, the dollar rose against five of its six currencies Tuesday as investors worried that the Fed could raise rates prematurely.
The S&P BSE Sensex Wednesday closed down by 50.70 points or 0.18% in see-saw trade while FPIs sold shares worth Rs 748.13 crore Tuesday as per provisional data.
Pramit Brahmbhatt, Veracity Group, CEO said, "Trading range for the spot rupee is expected to be within 62.40 to 63.20."
Meanwhile, the forward premia dropped further on persistent sluggishness on sustained receipts from exporters.
The benchmark six-month premium payable in August dipped to 225.25-227.25 paise from 229-231 paise Tuesday and the forward contracts maturing in February 2016 also tumbled to 437.25-439.25 paise from 444.5-446.5 paise.
The Reserve Bank of India fixed the reference rate for dollar at 62.7450 and for Euro at 67.0955.
The rupee remained firm against the pound to 94.45 from overnight closing level of 94.53 and also shot up further to 66.37 against the euro from 67.48.
It moved up slightly to 51.67 per 100 Japanese yen from 51.71 on Tuesday.