The rupee parlty wiped off its initial losses but was still trading a tad weak at 66.43 against the greenback on weak domestic equities and sustained dollar demand from importers amid higher dollar overseas.
Traders said the yen fell after Bloomberg quoted Japanese ruling Liberal Democratic Party lawmaker Kozo Yamamoto as saying in an interview that the BOJ's policy meeting on October 30 would be a "good opportunity" for additional monetary easing.
The dollar briefly rose to 121.38 yen, its highest since August 31, after Yamamoto's comments. It was last trading at 120.88 yen, up 0.3 per cent on the day.
The greenback rose against the yen in a knee-jerk reaction in a thin market, said Jeffrey Halley, FX trader for Saxo Capital Markets in Singapore.
The domestic unit gave up its overnight gains and resumed sharply lower at 66.70 per dollar against yesterday’s level of 66.41 at the Interbank Foreign Exchange (Forex) market.
It hovered in a range of 66.42 to 66.75 during the evening deals before quoting at 66.43 at 4.40 pm local time.
Meanwhile, the benchmark BSE Sensex ended down by 97.41 points or 0.38 per cent at 25,622.17.