Rupee at a new closing low near 54 against dollar

The rupee closed at a fresh low of 53.9750 against the dollar at the interbank foreign exchange market today amidst a flight of funds and rising domestic inflation level that marred prospects of an easing of the Reserve Bank of India's monetary stance.

The fresh euro-zone worries that lifted the dollar as global investors flocked to safe haven dollar also affected rupee sentiment, traders said.

Forex dealers said there was increased demand for dollar from banks and importers, mainly oil refiners, despite RBI steps last week to stem the rupee fall.

India's rising balance of payments also reached 4.3 per cent of the country's gross domestic product as of the December quarter on the back of rising foreign exchange outflows, worsening the country's current account deficit.

The inflation data that showed an increase to 7.23 per cent in April, especially at a time when economic growth has slumped, also affected market sentiment.

The uncertainty sparked by India's exposure to the crisis-hit euro zone and China also made the Indian currency vulnerable.

The rupee resumed trading during the day lower and dropped further to end at a new closing low of 53.98 per dollar, showing a loss of 34 paise.

The rupee had hit a record low of 54.30 against the US currency in mid-December.