Mumbai (PTI): Indian rupee today rallied to trade below 42-mark initially but could not sustain the gains and closed cheaper by four paise at 42.13/14 against the US currency as a heavy demand for the greenback emerged from oil refiners amid a downtrend in local stocks.

Initially, the domestic unit surged past the 42-level to hit a 10-week intra-day high of 41.82 in anticipation of fresh capital inflows following indications that the government would relax FDI limits in sectors like insurance.

In high volatility at the Interbank Foreign Exchange (forex) market, the rupee fluctuated between 41.82 and 42.20 during the day after resuming firm at 41.92/93 a dollar from its last close of 42.09/10 a dollar.

Forex dealer said oil corporates stepped up dollar buying for their month-end import payments amid easing global crude oil prices, which traded around USD 124 a barrel in Asian trade today.