MUMBAI, Feb 2: The Indian rupee trimmed losses in late trade on Monday as custodial banks unwound long dollar positions, but the U.S. unit’s strength against other major currencies overseas prevented a sharper rise.

The partially convertible rupee closed at 48.92/93 per dollar, 0.1 per cent weaker than its previous close of 48.87/88.

The dollar-rupee came down during late trade due to liquidation of long dollar positions by custodial banks, a senior trader with a foreign bank said.

However, losses in the domestic share market continued to fuel concerns of more foreign fund withdrawals while a stronger dollar overseas also weighed on sentiment, dealers said.

Indian shares fell 3.8 per cent on Monday in their biggest drop in almost four weeks, as weak data and rising bad loans sent lenders such as ICICI Bank and Housing Development Finance Corp sharply lower. Foreign fund flows have been a key factor for the rupee’s fortunes in recent years. Foreigners have already pulled more than $1 billion from Indian shares this year, to add to outflows of more than $13 billion in 2008.

The rupee lost 19.1 per cent last year. The euro hovered near two-month lows against the dollar on Monday while sterling sank more than two per cent against the US currency on worries over the financial sector and economic outlook.—Reuters