Snapping its three-day winning spree against the American currency, the rupee declined by 3 paise to close at 66.53 on fag-end dollar demand from importers on the back of higher greenback in the overseas market.
The rupee resumed higher at 66.46 as against the last weekend's level of 66.50 at the Interbank Foreign Exchange Market and firmed up further to 66.41 on initial selling of dollars by exporters and banks on the back of persistent foreign capital inflows amidst firm equity market.
However, it dropped afterwards to 66.58 on renewed dollar demand from importers on the back of recovery of dollar in the overseas market before ending a 66.53, showing a marginal loss of 3 paise or 0.05 per cent.
It had gained by 88 paise or 1.31 per cent in previous three days.
The rupee hovered in a range of 66.41 and 66.58 per dollar during the day.
Foreign funds continued their buying spree as FPI/FII bought shares worth Rs 1,712.62 crore on last Friday as per the provisional figures issued by stock exchanges.
The dollar index was up by 0.08 per cent against a basket of six currencies in the late afternoon trade.
The dollar was edging higher in the global market in the afternoon session following last week's loss of more than 1 per cent against key rivals.
The greenback was punished last week after the Federal Reserve signaled a slower pace of interest rate increases this year.
Pramit Brahmbhatt of Veracity Financial Services said, "The rupee opened on a flat note and breaking below 66.50 against the dollar despite positive domestic cues where our benchmark index Nifty gained nearly 100 points, the rupee stopped appreciating further. Thus the rupee closed with a loss of 3 paise at 66.53.
Trading range for spot USD/INR pair is expected to be within 66.20 to 66.80/USD for the day.
The benchmark Sensex rose by 332.63 points or 1.33 per cent to end at 25,285.37.
In forward market, premium for dollar moved down further due to persistent receivings from exporters.
The benchmark six-month premium for August dropped to 206.5-208.5 paise from the last weekend's level of 208-210 paise and far forward February 2017 contract also declined further to 412-414.5 paise from 413-415 paise.
The RBI fixed the reference rate for the dollar at 66.5040 and euro at 74.9168.
In cross-currency trades, the rupee recovered against the pound sterling to finish at 95.76 from 96.15 on last Friday.
However, the rupee closed unchanged against the euro 75.01 and for per 100 yen at 59.67.
