Mumbai: The rupee weakened further on Tuesday and closed 12 paise lower at 67.54 against the US dollar on steady demand for the greenback from importers and corporates.
Currency traders stayed on sidelines amid extreme caution ahead of Wednesday's FOMC rate decision.
Heavy capital outflows from foreign funds and release of domestic macroeconomic data, as the government will release inflation data based on Consumer Price Index (CPI) later in the day, largely weighed on trade.
The home currency opened substantially weak at 67.47 as compared to last Friday's closing level of 67.42 at the Interbank Foreign Exchange (forex) market.
It remained under pressure throughout the day and touched an intra-day low of 67.55 during late afternoon deals before ending at 67.54, revealing a loss of 12 paise, or 0.18 percent.
In worldwide trade, the dollar steadied against the yen and euro on Tuesday after its weakest day in a week, with markets still uneasy that a Federal Reserve meeting ending on Wednesday may provoke more investors to take out greenback's recent gains.
The US dollar index was quoted modestly higher at 101.12 in late afternoon trade.
Meanwhile, the RBI today fixed the reference rate for the dollar at 67.4867 and euro at 71.7654.
In cross-currency trades, the rupee fell back sharply against the pound sterling to end at 85.78 from 85.01 and also retreated against the euro to finish at 71.65 as compared to 71.43 last weekend.
The home unit, however, rebounded against the Japanese yen to settle at 58.52 from 58.83 per 100 yens previously.
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