Mumbai: The rupee advanced further by a modest 2 paise to end at 66.69 against the US currency in an extremely thin and lethargic trade owing to stray dollar selling from banks and exporters.
Trading has been little choppy as traders appear cautious about making fresh bold bets ahead of key domestic macro data and Donald Trump's speech to a joint sitting of the US Congress later on the day.
Besides, fresh capital outflows too impacted the forex market sentiment to some extent as data showed foreign funds sold shares net of Rs 145.55 crore on Monday.
Meanwhile, the Paris-based think tank OECD, the multi-country forum on Tuesday slashed India's growth forecast to 7 per cent for 2016-17 in view of demonetisation, but said the pace will accelerate to 7.3 per cent in the next fiscal.
The Organisation for Economic Cooperation and Development (OECD) had in February last year projected the country's economy to expand at 7.4 per cent in 2016-17.
The local unit resumed substantially lower at 66.80 from overnight closing value of 66.71 at the Interbank Foreign Exchange market due to month-end demand for the greenback from importers.
It maintained a tight point range throughout trade in the absence of any major catalyst, but the level was quickly reversed in the mid-afternoon trade to touch a fresh intra-day high of 66.68 before settling at 66.69, showing a nominal 2 paise gain, or 0.03 per cent.
Stretching its gains for the third-straight day, the home currency has appreciated by a whopping 27 paise.
The greenback, however, continued to move without direction ahead of US President Trump's address to Congress on Tuesday evening.
The US dollar index was trading lower at 101.00 in late afternoon session.
The RBI fixed the reference rate for the dollar at 66.7375 and for the euro at 70.7151.
In cross-currency trade, the rupee turned weak against the British pound to end at 82.87 from 82.78 and drifted further against the euro to finish at 70.68 as compared to 70.56 earlier.
It also softened against the Japanese Yen to conclude at 59.43 per 100 yens from 59.42 yesterday. .
Meanwhile, domestic equity markets continued to reel under selling pressure for the second day ahead of key macro data and also some profit-taking due to steep valuations despite highly buoyant global sentiments.
The benchmark Sensex dropped by 69.56 points to end at 28,743.32, while broader Nifty fell over 17 points at 8,879.60.
In the forward market, premium for dollar showed an easy to firm trend in the absence of any market moving factors.
The benchmark six-month premium for July inched down to 135-137 paise from 136-138 paise, while the far-forward January 2018 contract edged higher to 293-295 paise from 292-294 paise on Monday.
On global commodity front, crude prices gained further ground on Tuesday, underpinned by high compliance with OPEC's production cuts despite rising US production.
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