Mumbai: The rupee ended lower by 18 paise to 66.81 against the US currency on fresh dollar demand from banks and importers in view of foreign capital outflows amidst fall in equity market.
The rupee resumed sharply lower at 66.90 per dollar against last closing level of 66.63 per dollar at the Interbank Foreign Exchange (Forex) market and dropped further to 66.9250 per dollar on initial dollar demand.
However, it trimmed losses on mild selling of dollars by banks and recovered to 66.70 per dollar before ending at 66.81 per dollar, still showing a loss of 18 paise or 0.27 percent.
It moved in a range of 66.9250 and 66.70 per dollar during the day.
The dollar index was up by 0.20 percent against a basket of six currencies in the late afternoon trade.
In overseas, the safe haven yen eased against dollar after China's central bank set a stronger guidance rate for the yuan in early Asian trade, soothing fears that Beijing is trying to weaken its currency to gain a competitive export advantage.
Oil prices fell further in Asian trade on persistent worries over the growth slowdown in China's economy and a supply glut.
Meanwhile, the benchmark BSE Sensex dropped by 109.29 points or 0.44 percent to close at 24,825.04 points.
In forward market, premium for dollar eased further on sustained receivings by exporters.
The benchmark six-month premium payable in June closed unchanged at 195-197 paise while far forward December 2016 contract eased to 405-407 paise from 406-408 on last Friday.
The RBI fixed the reference rate for the dollar at 66.7885 and for the euro at 72.9264.
The rupee firmed up further against the pound sterling to settle at 97.34 from the last weekend's level of 97.40 but dropped against the euro to finish at 72.82 from 72.46.
The domestic unit also fell against the Japanese yen to end at 56.76 from 56.34 per 100 yen.