Mumbai: The rupee today retreated from a seven-week high, dropping 35 paise to close at 61.79 against the dollar, after stocks weakened on concerns about the continuing US government shutdown.
Fresh dollar demand from importers also dragged the rupee lower, ending three sessions of gains for the currency.
At the interbank foreign exchange market, the rupee opened lower at 61.50, compared with Friday's close of 61.44 and declined to a low of 61.96 on weakness in stocks.
The local currency recovered some ground in line with local equities and closed at 61.79, a fall of 35 paise or 0.57 per cent.
In the previous three sessions, the rupee had gained 116 paise or 1.85 per cent.
“The rupee was seen erasing its earlier sharp gains against the US dollar and showed slight weakness. The fall was attributed to the negative stock markets and a slight recovery in the US dollar index,” said Abhishek Goenka, CEO of India Forex Advisors.
The 30-share S&P BSE Sensex, which fell as much as 268 points, recovered to close 20.85 points lower.
There was concern among investors about the US shutdown after lawmakers in Washington remained deadlocked over extending the nation's debt limit to avoid default before the October 17 deadline.
Foreign institutional investors bought a net Rs 541.36 crore of shares on Friday, as per provisional data with stock exchanges.
“The trading range for the USD-INR pair is expected to be within 61.40 to 62.30,” said Pramit Brahmbhatt, CEO of Alpari Financial Services (India).
Forward dollar premiums recovered on fresh payments from banks and corporates.
The benchmark six-month forward dollar premium payable in March edged up to 248-253 paise from 247-252 paise previously and far-forward contracts maturing in September rose to 462-465 paise from 459-464 paise.
The RBI fixed the reference rate for the dollar at 61.7760 and for the euro at 83.8360.
The rupee fell to 99.36 against the pound from Friday's close of 98.53 and turned negative to end at 83.89 per euro from 83.10.
It dipped further against the Japanese yen to 63.77 per 100 yen from 63.22 previously.