The rupee, which slumped 15.8 percent in 2011, fell in light New Year trading on Monday, with many global markets closed for a holiday.

Rupee

Rupee

Traders said scattered demand for dollars from oil importers pushed the rupee to 53.3050/3150 to the dollar by 11:48 a.m. (0618 GMT), 0.4 percent weaker than its previous close of 53.08/09.

The central bank, which is suspected to have intervened by selling dollars last week, is expected to step in again if the rupee slips to around 53.50, traders said.

In 2011, the currency posted its biggest annual fall since 2008 as foreign funds pulled out on slowing growth, worsening current account deficit and an uncertain global economic outlook.

The government's worsening fiscal deficit could weigh down the stock market and trigger more foreign fund withdrawals, a trader at a state-run bank said.

The main stock index was down 0.2 percent after falling nearly a quarter in 2011.

The Reserve Bank of India said late on Friday the government would borrow an additional 400 billion rupees in the current fiscal year ending in March.

One-month offshore non-deliverable forward contracts were quoted at 53.79 rupees, indicating more weakness was likely in the short term.

In the currency futures market, the most-traded near-month dollar-rupee contracts on the National Stock Exchange, the MCX-SX and the United Stock Exchange were around 53.62, with the total volume at $516 million.

Traders said a clearer picture about the outlook would emerge when the world markets resume after the New Year holidays, especially the euro that is tracked by the rupee.

The global markets are off today. So not much to read into the rupee movement, a dealer with a private bank said.

The euro capped off the most tumultuous year in its short history on Friday, slipping to a 10-year trough below 100 yen and struggling to hold gains against the dollar, a trend traders expect to continue in 2012.