Weakness of dollar in the global markets and foreign capital outflows also affected the rupee sentiment.
After a brief pause, the rupee on Thursday once again fell back to its old ways, slipping by 6 paise to end at 67.21 a dollar on fag-end demand for the American unit from banks and importers amid fall in domestic stocks.
Weakness of dollar in the global markets and foreign capital outflows also affected the rupee sentiment, a forex dealer said.
The rupee opened higher at 67.12 against yesterday's closing level of 67.15 at the Interbank Foreign Exchange (Forex) market here today on initial selling of dollars by exporters.
However, it dropped afterwards to 67.33 before ending at 67.21 on fag-end dollar demand from banks and importers, showing a loss of of six paise or 0.09 per cent.
The domestic currency hovered in a range of 67.12 and 67.3350 per dollar during the day. The rupee had gained by 12 paise or 0.18 per cent against the American currency yesterday.
Meanwhile, the dollar index was up 0.42 per cent against the basket of six global currencies in the late afternoon trade.
The RBI fixed the reference rate for the dollar at 67.2068 and euro at 75.8160. In cross-currency trades, the rupee recovered against the pound sterling to close at 94.97 from 95.31 yesterday and moved up further against the euro to 75.21 from 75.40.
However, the domestic currency dropped against the Japanese yen to 64.39 per 100 yens from 63.19. Overseas, the US dollar was on defensive against its major rivals in early Asian trade, while sliding to a 21-month low against the yen after the Bank of Japan held off from expanding its monetary stimulus.
The greenback was already under pressure after the US Federal Reserve lowered its economic growth forecasts and scaled back its rate hike projections.
The yen rallied to multi-month highs against rival currencies in the late trade, as the Bank of Japan’s decision to hold fire prompted short-term players to buy the Japanese currency.
As widely expected, the Bank of Japan voted to leave its annual asset-purchase target unchanged at 80 trillion yen (around $760 billion) a year and its deposit rate steady at minus 0.1 per cent.
In forward market, premium for dollar declined on mild receivings from exporters.
The benchmark 6-month premium for November moved down to 192.5-194.5 paise from 195-197 paise previously and far forward May 2017 contract eased to 387-388.5 from 388-390 paise.
Meanwhile, the benchmark Sensex fell by 200.88 points or 0.75 per cent to 26,525.46.
Oil prices sank for a sixth straight session today in Asia, tracking a sell-off across equities with an expected pick-up in output adding to worries about the global economy and a weaker-than-forecast fall in US stockpiles.
The news sent the commodity tumbling in Asia, US benchmark West Texas Intermediate slipped 46 cents, or 0.96 per cent, to $47.55 while Brent shed 34 cents, or 0.69 per cent, to $48.63.