Erasing initial gains, the rupee on Monday fell four paise to 55.38 against the US dollar in late morning trade on month-end demand for the American currency from banks and importers despite firm trend at local equity markets.
The local unit resumed higher at 55.28 per dollar as against Friday's closing level of 55.34 per dollar at the Interbank Foreign Exchange Market and firmed further to 55.20 on sustained dollar selling by exporter and some banks amid strong local equity market.
However, it reacted downwards to 55.40 per dollar on month-end dollar demand from importers, mainly in oil refiners, before quoting at 55.38 per dollar at 1040 hours.
In New York, dollar erased most of its losses on last Friday after the euro briefly jumped following more comments from European Central Bank President Mario Draghi about policy options.
Meanwhile, oil prices were showing mixed trends in Asian early trade on Monday as investors await further measures by policymakers to boost the ailing euro-zone and US economy, analysts said.
New York's main contract, light sweet crude for September delivery eased 13 cents to $90.00 a barrel.
Forex experts feel that in the short-term some global and local events may put further pressure on the rupee.
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"If trifecta stays pat on their existing monetary policies, then USD/INR can return to 56 and above.
However, if the risk-on mood persists post the trio-events, then we could see even a move towards 54.18/54.00 on spot," said Anindya Banerjee, currency expert, Kotak Securities.
The Eurozone official meeting on Thursday will be keenly eyed by the global investors, dealers said.
". . . the Euro is expected to witness selling pressure at 1.23 levels, importers take the advantage of dips to cover their open exposure.
"Overall, we are still bearish on the rupee,"said Abhishek Goenka, CEO, India Forex Advisors.
The premium for the forward dollar finished today narrowly mixed.
The benchmark six-month forward dollar premium payable in December ended at 152-154 paise from last weekend's close of 152-1/2-154-1/2 paise.
The premium for far-forward contracts maturing in June settled at 297-1/2-299-1/2 paise from 297-299 paise.
The RBI fixed the reference rate for the dollar at 55.4428 and for euro at 68.1465.
The rupee moved down further against the pound sterling to end 87.27 from last Friday's close of 86.90 while fell back against the Euro to 68.15 from 68.01.
It also turned negative against the Japanese yen to end at 71.08 per 100 yen from last close of 70.80.
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