The rupee pared its initial gains to depreciate by 6 paise to 67.21 against the American currency in late morning deals following fresh bouts of dollar demand from importers and banks amid lower domestic equities.
The rupee opened higher by 67.12 against yesterday's closing level of 67.15 at the Interbank Foreign Exchange (Forex) market here today.
Later, it hovered between 67.12 and Rs 67.23 during morning deals, before quoting at 67.21 at 1030 hrs.
Meanwhile, the dollar index was down 0.30 per cent at 94.31 against the basket of six global currencies.
Overseas, the US dollar was on defencive against its major rivals in early Asian trade, while sliding to a 21-month low against the yen after the Bank of Japan held off from expanding its monetary stimulus.
The greenback was already under pressure after the US Federal Reserve lowered its economic growth forecasts and scaled back its rate hike projections.
Meanwhile, the benchmark Sensex was trading lower by 326.58 points, or 1.22 per cent, to 26,399.76 at 1050 hrs.
In the forward market, premium for dollar continued to
trade lacklustre in the absence of any market moving factors.
The benchmark six-month premium for February was almost flat at 174-176 paise compared to 174.25-176 paise, while the forward August 2017 contract held steady 362-364 paise.
Meanwhile, frantic buying by funds and general investors in key frontline heavy-weight stocks keep the winning momentum intact for the third-straight session as the benchmark Sensex jumped 186.14 points to close at 28,599.03, while broader Nifty rose 37.30 points to 8,779.85.
Crude prices fell more than 1 percent following news of rising Iranian exports and returning supplies from Libya and Nigeria amid global glut fears.
Benchmark Brent crude futures fell below the USD 46 a barrel mark, trading down 1.4 percent at USD 45.95 a barrel.
