Mumbai: The rupee plummeted by 31 paise to end at over two-year low of 65.31 against the US dollar Monday on the back of consistent demand for greenback from importers and state-run banks.
Sluggish trade data amid highly volatile global currency market sentiment in the aftermath of China's yuan devaluation predominantly weighed on trade, forex dealers said.
Besides, fresh bouts of selling in local equities added pressure on the local currency.
The dollar edged higher against other major currencies amid uncertainty over the impact of the yuan's devaluation last week as well as global inflation expectations against the backdrop of Fed rate hike.
The rupee resumed lower at 65.12 as against last weekend's level of 65 at the Interbank Foreign Exchange (Forex) market on good dollar demand amid higher greenback overseas as well as weak domestic equity markets.
It kept falling during the trade to hit a fresh low of 65.36 before finishing at 65.31, showing a fall of 31 paise, or 0.48 percent.
The domestic currency had recovered 10 paise after sliding for seven straight sessions to close at 65 against the US dollar in Friday's trade.
The country's exports contracted for the eighth straight month in July to USD 23.13 billion, pushing the trade deficit to USD 12.81 billion.
The US dollar index, which measures greenback's strength against a trade-weighted basket of six major currencies, was up 0.14 percent at 96.74.
Meanwhile, the benchmark BSE Sensex fell sharply by 189.04 points to close at 27,878.27.
Foreign portfolio investors (FPIs) were net buyers to the tune of Rs 403.76 crore on Friday, as per provisional data released by the stock exchanges.
Veracity Group CEO Pramit Brahmbhatt said, "Rupee traded weak taking cues from a stronger dollar. It depreciated by over thirty-one paise for the day as local equities also traded low and closed on a weak note."
The trading range for the Spot USD/INR pair is expected to be within 64.80 to 65.80.
In the forward market, the premium for dollar continued to fall on sustained receivings from exporters.
The benchmark six-month premium payable in January declined further to 194-196 paise from 195.5-197.5 paise on last Friday and far-forward contracts maturing in July 2016 also moved down further to 415-417 paise as against 416.5-418.5 paise.
The RBI fixed the reference rate for the dollar at 65.220 and for the euro at 72.3942.
The rupee fell back against the pound sterling to finish at 102.09 as compared to 101.64 and also retreated against the Japanese currency to 52.45 per 100 yen against 52.38 previously.
It, however, recovered against the euro to 72.45 from 72.67.
