The Indian rupee ended at its lowest close in 11 weeks on Monday, driven down by dollar buying by state-run banks, which traders said was once again on behalf of the central bank.
The rupee opened at about 44.57 per dollar, helped by dollar weakness against the Japanese yen, but it ended at 44.6650/6750, slightly below Friday's close and its weakest finish since January 5, according to Reuters data.
Dealers said demand for dollars from oil importers as well as an arbitrage opportunity between the onshore and offshore markets had pushed the rupee off its strong start and state-run banks had also stepped in to buy the US currency.
"We saw nationalised banks continuing to buy," said a trader at a foreign bank. "The central bank saw to it that the rupee didn't close stronger today."
State-run banks have been buying dollars in recent sessions with traders suspecting the action has been on behalf of the central bank to offset upward pressure on the rupee from foreign investment in the Indian stock market.
Indian shares ended more than 1 percent higher on Monday after surging to a record above 11,100 points.
Oil prices held above $64 a barrel near a seven-week high early in the day, which brought in local demand for dollars, but US light crude later slipped.
India imports 70 percent of its oil and state-run refiners usually make their payments toward the end of each month.
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