The Indian rupee fell 54 paise to end at 63.37 against the US dollar,
the biggest drop in two weeks, on fresh demand for the US currency from importers ahead of the Federal Reserve's two-day policy meeting.
At the Interbank Foreign Exchange Market, the local currency resumed at 63.37 to the dollar from the previous close of 62.83. It moved in a range of 62.95 and 63.6450 before settling at 63.37, a fall of 54 paise or 0.86 per cent.
It was the biggest drop for the rupee since September 3, when the currency fell 163 paise to 67.63 against the dollar. It had gained 67 paise during the previous two sessions.
"On the domestic front, yesterday's inflation numbers have dented sentiment," said Abhishek Goenka, CEO of India Forex Advisors. "Going ahead, the two-day FOMC meeting starting today and the RBI monetary policy
on September 20 will be driving the markets."
The rupee trimmed gains on Monday after the government said inflation as measured by the wholesale price index was 6.1 per cent
in August, the fastest pace in six months.
A forex dealer said the rupee's fall on Tuesday was restrcited by a drop in the value of the dollar overseas, positive local equities and capital inflows
The Federal Open Market Committee (FOMC) meeting starts on Tuesday and investors expect a decision on a reduction in the pace of its bond-buying programme. The dollar index, a gauge of six major global rivals, was down 0.15 per cent.
Domestic stocks were choppy and the benchmark BSE Sensex ended 61.56 points higher. Overseas investors injected a net $50.22 million in stocks on Tuesday.
"The trading range for the spot USD-INR pair is expected to be within 63 to 64," said Pramit Brahmbhatt, CEO of Alpari Financial Services (India).With inputs from PTI