Mumbai: The rupee dropped by 23 paise to settle at one-week low of 53.91 against the Greenback on heavy dollar demand from importers amid some hesitancy in local stocks.
Firm dollar overseas also weighed on the rupee, while continued foreign funds inflow in equities restricted the fall to some extent, a forex dealer said.
The rupee commenced weak at 53.85 a dollar from last Thursday's close of 53.68 at the Interbank Foreign Exchange (Forex) market and moved erratically in a narrow range between 53.75 and 53.95 before concluding at 53.91, showing a fall of 23 paise or 0.43 percent.
The Indian benchmark Sensex Monday moved in a narrow breadth before finishing almost flat ahead of the Reserve Bank of India's (RBI) third quarter monetary policy tomorrow.
Month-end dollar from importers affected the rupee sentiment.
The dollar index, a gauge of six major global currencies, was up by 0.12 percent.
After appreciating for the last couple of sessions, rupee started depreciating against the US dollar Monday. Rupee was seen weakening despite the strong recovery in the euro. The month end demand for dollars from the importers is putting some pressure on the rupee.
"The rupee was seen trading in the range of 20 paise. The dollar index was higher, rupee was seen depreciating against the US dollar. This points towards the inherent weakness in the rupee. Tomorrow's RBI monetary policy will be the important event to watch for," said Abhishek Goenka, Founder and CEO, India Forex Advisors.