Resuming firm at 39.34/35 a dollar from overnight close of 39.38/39 a dollar in quiet trade at the Interbank Foreign Exchange (forex) market, the local currency fell back and was quoted at 39.38/39 a dollar in late morning deals.
Forex dealers said month-end dollar demand by banks on behalf of oil refining firms weighed on the rupee sentiment.
Oil companies buy dollar to meet their import proceeds at the month-end. Global crude oil prices were quoted at around USD 91 a barrel in Asian trade this morning.
Initially, the rupee drew support from strong Asian equity markets. Indian benchmark Sensex was up 291 points at 18,443.66, while other major Asian indices gained about 0.5 to 1.75 per cent in morning trade.
Dealers, however, preferred to wait and watch as the central bank will announce quarterly review of monetary policy during the day.