"RBI's ability to intervene in forex market is limited", Department of Economic Affairs Secretary R Gopalan told reporters here.
In the early trade, rupee fell 16 paise to Rs 51.50 against the dollar on the Interbank Foreign Exchange because of sustained demand for the American currency from banks and importers.
The domestic currency had tumbled 44 paise to Rs 51.34/35 per dollar in the previous session on heavy demand and firmness of the American currency overseas.
Dealers said the dollar demand from some banks and importers, mainly oil refiners, weighed on the rupee's fortunes.
They said concerns over foreign fund outflows from the domestic equity market and dollar demand from state-run oil refiners reduced the rupee's attractiveness.
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