A firm dollar in overseas market also weighed on the rupee sentiment while capital inflows into Indian stocks provided some respite, forex dealers said.
At the Interbank Foreign Exchange (Forex) market, the domestic currency opened strong at 52.39 a dollar from last close of 52.64. It quickly touched a high of 52.23 on the back of smart gains logged in local stocks in early trade.
However, the rupee fell back after morning session and touched a low of 52.83 -- its lowest in a week.
Sustained dollar demand from importers, mainly oil refiners, and some banks put pressure on the rupee. The New York crude oil was trading above USD 90 a barrel today.
The rupee finally finished a tad better at 52.72 -- a drop of eight paise. Yesterday, rupee had registered its second biggest fall of 79 paise in 2012 calender year. On last Friday, the currency had lost 11 paise.
Traders said the dollar index, a barometer of six major global currencies, was up by 0.10 per cent due to safe-haven related support after reports that IMF cut its forecasts for global growth.
"The losses in rupee were seen on account of weakness in Euro after the ECB President Mario Draghi expressed his concerns over financial instability in the Euro region. Also, a recovery in the dollar index contributed to the weakness," said Abhishek Goenka, Founder & CEO, India Forex Advisors.
The Indian stock market benchmark Sensex, which was up by nearly 177 points in morning trade, dropped on profit-booking after mid-session but still closed up by 84 points. (MORE)
