A steep fall in dollar overseas amid signs of continued capital inflows restricted the rupee decline, a forex dealer said. The dollar index was down by 0.44 per cent against six other major currencies.
Data showed that manufacturing PMI (purchasing managers' index) for the euro area rose to a 32-month high in January, beating analysts expectations and providing evidence that the region is recovering.
At the Interbank Foreign Exchange (Forex) market here, the domestic unit resumed lower at 61.95 a dollar from previous close of 61.81.
It was trapped in a narrow range of 61.89 and 62.04 before finishing at two-week low of 61.93, a fall of 12 paise or 0.19 per cent. This is the lowest close in two weeks. It had settled at 62.07 on January 9, 2014.
The benchmark BSE Sensex continued its upward march for the fourth session in a row and registered its an all-time closing high of 21,373.66, gaining 36 points.
FIIs picked up shares worth USD 46.64 million yesterday, as per Sebi data.
Pramit Brahmbhatt, CEO, Alpari Financial Services (India), said: "Dollar demand from oil importers forced rupee to close on a weak note."
Forward dollar premiums fell back on fresh receipts by exporters.
The benchmark six-month forward dollar premium payable in June declined to 210-212 paise from 213.5-215.5 paise.
Far forward contracts maturing in December softened to 447-449 paise from 448.5-450.5 paise previously.
The RBI fixed the reference rate for the dollar at 61.98 and for the euro at 83.97.
The rupee dropped further to 102.81 against the pound from 102.27 and also remained weak to end at 84.44 per euro from 83.76 previously. The local currency declined to 59.37 per 100 Japanese yen from 59.24.