The Indian rupee trimmed its initial gains against the US dollar on Monday, in line with fall in local equities, ending down by a mere six paise at 61.52, on late dollar demand from importers.
The Sensex closed down by 113.24 points, or 0.55 per cent, extending losses for the fifth straight trading day.
Month-end dollar demand from importers, mainly oil refiners, also put pressure on the rupee, a forex dealer said.
The currency resumed higher at 61.35 per dollar as against the last weekend's level of 61.46 at the Interbank Foreign Exchange (Forex) Market and hovered in a narrow range of 61.37 per dollar and 61.60 per dollar before settling at 61.52, showing a fall of six paise or 0.10 per cent.
The dollar index was up by 0.05 per cent against a basket of six major global rivals, with some analysts forecasting downside risk for the US dollar amid economic data and a Federal Reserve policy statement.
Abhishek Goenka, founder and CEO, India Forex Advisors, said: "...Since last one week, the rupee has been trading in the range of 61.20-61.80... there is a lack of direction for the (INR-USD) pair at present. Going ahead, tomorrow's RBI monetary policy will be keenly watched where a 25 bps repo rate hike is widely expected."