The rupee had fallen to a low of 65.79 in early trade but the RBI's suspected intervention helped the currency recover to a day's high of 65.59.
The rupee today slipped by 2 paise to settle at a fresh seven-month low of 65.66 against the US currency due to sustained dollar demand and forex outflows, extending its fall for a third day amid surging crude prices.
The rupee had fallen to a low of 65.79 in early trade but the RBI's suspected intervention helped the currency recover to a day's high of 65.59.
State-owned banks and private lenders sold dollar likely on the behalf of the central bank to stem weakness in the local currency, a forex dealer said.
High crude oil prices and losses in stock markets, however, weighed on the rupee later which fell back to close down by 2 paise or 0.03 percent at 65.66 per dollar.
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The rupee has already lost 46 paise against the dollar since Monday amid worsening trade deficit and rising global crude prices.
Crude prices shot up 1.66 percent after a reported fall in US crude inventories and by the ongoing risk of supply disruptions along with Venezuelan production declines. Brent crude was trading above at USD72.79 a barrel in early Asian trade.
According to provisional exchange data, foreign investors pulled out Rs 915.71 crore from capital markets today.
Stock markets also ended their nine-day run to close marginally down with the BSE Sensex dropping by 63 points to end at 34,331.68 and the broader NSE Nifty by 22.50 points to 10,526.20. The RBI, meanwhile, fixed the reference rate for the dollar at 65.6814 and for the euro at 81.3004.
In the cross currency trade, the rupee recovered against the pound sterling to end at 93.31 from last close of 94.09 and recouped against the Japanese yen to finish at 61.27 per yens from 61.31 yesterday.
The home unit remained under pressure against the euro to settle at 81.28 as compared to 81.22.
In forward market today, premium for dollar witnessed a mixed trend in the absence of any market moving factors. Both the benchmark six-month forward premium payable in August softened to 94-96 paise from 94.50-96.50 paise, while the far-forward February 2019 contract moved up to .