The rupee closed at its lowest in five weeks on Tuesday, after it failed to hold early gains with sentiment edgy due to a slide in local stocks and as the dollar held near its recent peaks in the global market.
The rupee ended at 43.8100/8200 per dollar, 0.06 per cent weaker than Monday's 43.7850/7900 and its lowest since Feb. 21, after rising to a session high of 43.76.
"Given the sharp fall in stocks, there were some concerns about a slowdown in foreign fund inflows, which kept the dollar well bid," said a dealer at a foreign bank.
Indian shares fell more than 2 per cent on Tuesday to their lowest close in two months, as weaker regional indices and year-end jitters dragged frontline stocks lower across sectors.
In overseas trade, the dollar hit a five-month high against the yen, while it held within a cent of recent six-week peaks on the euro ahead of a raft of U.S. data this week which could bolster the case for further interest rate hikes.
The dollar rose as high as 107.38 yen, its highest level since late October, before easing to 107.16 by 1125 GMT.
The euro stood at $1.2928, up a third of a percent on the day, having fallen to a six-week low of $1.2853 on Monday.
The Federal Reserve raised rates last week by a quarter percentage point and simultaneously indicated that faster rate rises were possible in the future to ward off inflation.
Traders said as oil supplies did not appear to have been disrupted by a powerful earthquake off the coast of Indonesia's Sumatra island overnight and there had been no repeat of last December's tsunami, the market had taken the news in its stride. The rupee has been kept on a tight leash by sustained central bank selling since it scaled a five-year peak of 43.30 in early February and has now lost nearly
three-quarters of a percent in 2005, despite robust foreign fund inflows.
