Bangalore: The Indian rupee fell by 37 paise, its biggest drop in two weeks, to close at 59.72 following month-end dollar demand from oil importers and some custodian banks coupled with capital outflows.

A weak dollar overseas failed to restrict the rupee's decline, a forex dealer said.

At the Interbank Foreign Exchange Market, the rupee opened at 59.30 to a dollar from close of 59.35 and climbed to a high of 59.29. It later fell to a low of 59.74 before settling at a one-week low of 59.72, a drop of 37 paise, or 0.62 percent.

The fall in absolute terms is the biggest drop since the rupee's 39 paise decline on July 8, when it plunged to record low of 61.21.

Forex dealers attributed the rupee's fall to heavy dollar demand from importers, mainly oil refiners, to meet month-end requirements and some banks on behalf of their clients.

"After opening on a strong note against the U.S. dollar, the rupee was seen weakening in the later part," said Abhishek Goenka, founder & CEO, India Forex Advisors. "It was seen trading range bound amid the absence of domestic and global cues. However, the weakness seen during the day was mostly attributed to a weak start in the domestic equity markets..

The benchmark S&P BSE Sensex came off a two-month intra-day high to end just nine points up.

Foreign institutional investors pulled out a net 406.02 crore from stocks, as per provisional data with the bourses.

The dollar index was down by over 0.35 percent against a basket of six major global rivals.

"The trading range for the spot USD/INR pair is expected to be within 59.20 to 60.00," said Pramit Brahmbhatt, CEO of Alpari Financial Services (India).

Forward dollar premiums rose further on sustained payments from banks and corporates.

The benchmark six-month forward dollar premium payable in December settled strong at 214-1/2-216-1/2 paise from 203-206 paise. Far-forward contracts maturing in June climbed to 439-441 paise from 408-411 paise.

The RBI fixed the reference rate for the dollar at 59.4080 and for the euro at 78.1135.

The rupee fell against the pound sterling to 91.58 from close of 90.62 and tumbled against the euro to 78.72 from 77.93.

It dropped against the Japanese yen to 59.77 per 100 yen from 59.20 previously.

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