The Indian rupee eased on Thursday, weighed down by a 1 per cent fall in local shares and the dollar's gains against major units overseas.

At 10:35 am, the partially convertible rupee was at 47.11/12 per dollar, 0.1 per cent below its Wednesday's close of 47.05/06.

There was some corporate demand in early trade, but there is also a lot of dollar selling in the market which should hold the rupee in a range, said Naveen Raghuvanshi, an associate vice president, at Development Credit Bank.

He said the rupee was expected to volatile in the near term, and could appreciate towards 45.50-46 by the end of March helped by capital inflows and strong fundamentals.

Shares fell more than 1 per cent in early trade, raising concerns about sustainability of portfolio inflows.

Net purchases of $14.2 billion of shares by foreigners so far in 2009 have been a key factor helping the rupee rise from a record low of 52.2 in early March.

Last year, the rupee had fallen by nearly a fifth on portfolio outflows of more than $13 billion.

The dollar index, a gauge of the US unit's performance versus six majors, was up 0.3 per cent.

The dollar and the yen edged up on Thursday as short-term investors and Japanese exporters sold into a rally in the euro and higher-yielding currencies which followed a repeated pledge by the US Fed to keep rates low for a while.

One-month offshore non-deliverable forward contracts were quoting at 47.10/20, largely unchanged from the onshore spot rate.

... contd.