The rupee fell to a fresh 8-1/2 month closing low on Wednesday, as oil companies went on a dollar buying spree concerned that high oil prices would widen the trade deficit and lead to downward pressure on the local unit.
The rupee, which is overvalued on a trade-weighted basis by about 8 percent, ended at 44.13/1350 a dollar, weaker than the previous day's 44.0325/0375 and its lowest close since December 13 when it ended at 44.25/28.
It has lost 1 percent in the past three sessions, despite sporadic central bank intervention to support it.
Traders said a shortage of cash dollars required to fund immediate import needs, month-end demand for dollars from importers and arbitrage between offshore and onshore forward markets also pushed down the rupee.
One-month non-deliverable rupee forwards (NDFs) were quoted at 44.25/44.35 per dollar, pricing in up to a 0.5 percent depreciation in the rupee from the current spot rate.
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