Mumbai: The Indian rupee was unable to hold on to an early rise to three-week highs gains on Tuesday, losing ground to end slightly weaker after the stock market posted its first fall in five days.

The partially convertible rupee ended at Rs46.50/51 per dollar, weaker than Rs46.46/47 at close on Monday.

In early deals it rose to Rs46.35, its highest since 21 October, but later fell to a low of Rs46.61.

“It weakened because stocks fell after Fitch report on the possible downgrade of Britain,” said a forex trader at a foreign bank.

Fitch Ratings said that of the four major economies with AAA status, the UK was the most at risk, sending the pound down sharply.

Weak dollar against the euro late in the Indian session helped contain the rupee’s fall, the trader said.

“We expect USD/INR to grind towards 46.10-20 area,” he said.

The dollar’s trade-weighted index hovered near a 15-month low on Tuesday on the view US interest rates will stay low.

Indian shares snapped a four-day winning streak and fell 0.35%, weighed down by telecom stocks that dropped on a bleak out for the sector.

Foreigners have bought a net $14.5 billion of shares so far in 2009, after selling more than a net $13 billion last year. These inflows have helped the rupee recover from its record low of 52.2 hit in early March.

One-month offshore non-deliverable forward rupee contracts were quoting at Rs46.48/58, in line with the onshore spot rate.

In the currency futures market, the most traded near-month contracts on the National Stock Exchange and MCX-SX closed at 46.54 and 46.5375 respectively, with total traded volume on the two exchanges at about $3.6 billion.