Amid soaring oil prices and signs of capital inflows slowing down, the Indian rupee plunged sharply by 37 paise to a one-week low of 46.48/49 against the dollar.
Forex dealers said the rupee fell sharply in tune with sluggish trend in stocks. The benchmark Sensex on Wednesday dipped by a whopping 213.84 points or 1.24 per cent.
Dollar buying by importers, mainly oil refiners, also weighed on the rupee sentiment, they said. The global crude oil prices were quoting below $79 a barrel in Asian trade on Wednesday.
Meanwhile, the dollar was firm in Asia from a 14-month low but fell back in London as minutes of the Bank of England latest policy meeting pushed it lower against a basket of currencies.
Rupee's fall today is in sharp contrast to the smart gains it had posted in the recent days on sustained capital inflows, which saw the benchmark Sensex on BSE regaining the 17,000-level after more than one year.
In fairly active trade at the Interbank Foreign Exchange (Forex) market, the local unit opened weaker at 46.45/46 a dollar from its overnight close of 46.11/12.
It moved in a range of 46.32 and 46.52 before concluding the day at 46.48/49 per dollar, a fall of 0.80 per cent. It had gained 18 paise on Tuesday.
The Reserve Bank of India, however, fixed the reference rate for the US dollar at Rs 46.44 and for the euro at Rs 69.36.
Rupee premiums on the forward dollar dropped further on sustained receivings by exporters.
The benchmark six-month forward dollar premium payable in March ended lower at 58-60 paise from 61-1/2-63-1/2 paise on Tuesday and far-forwards maturing in September to finish down at 138-140 paise from 143-145 paise previously.
In cross-currency trade, the domestic currency continued to rule bearish against the pound sterling, the euro and the Japanese yen.
The rupee tumbled further against the pound to end at Rs 76.96/98 per pound from Tuesday's close of Rs 75.76/78 and also declined against the euro to Rs 69.37/39 per euro from Rs 69.10/12 previously.
It softened further against the yen to end at Rs 51.12/14 per 100 yen from its previous close of Rs 50.96/98.