The rupee dived to a 30-month low on Friday dragged by strong dollar demand from importers and caution rippling across equities and the euro on nervousness around euro zone crisis.
At 12:14 pm (0644 GMT), the partially convertible rupee had lost 0.5% of its value from Thursday's close and was at 50.07/08 per dollar, after hitting 50.18, its lowest since April 29, 2009 in early trade. Traders have hoped the central bank would step in and hold back the rupee from breaching the 50-mark, but so far, there has been no signs of any intervention from the Reserve Bank of India, they said.
The rupee is now expected to move in a range of 50.00 to 50.25 in the day, traders said.
"There is a lot of demand for dollars taking into account the uncertainty surrounding Europe. Gold and oil importers too have been active and adding to the pressure," said a foreign exchange dealer at a state-owned bank.
Oil is India's biggest import item and local oil refiners are the largest purchasers of dollars in the domestic forex market.
Gold traders in India, the world's top buyer of the precious metal, stepped up last minute purchases to stock for next week's festivals as prices fell for the fourth session in a row to their lowest level in more than six weeks.
Deep divisions between France and Germany mean they will make scant progress on strengthening the euro zone bailout fund at a summit on Sunday in a sign that Europe's leaders are still some way from getting a grip on the bloc's debt crisis.
So far this month, the rupee has weakened by more than 2% after erasing 8.8% of its value in the September quarter, and remains the worst performer among major Asian peers in 2011.
Indian shares were trading up 0.2%, but investors were edgy ahead of a European leaders meeting on the weekend to tackle the euro zone debt crisis that has cast a shadow on foreign fund investments.
So far in 2011, foreign funds have net sold around $222 million of local shares, data from capital markets regulator Securities and Exchange Board of India showed.
The euro was at $1.3753, lower from $1.3789 at end of rupee trade on Thursday and the index of the dollar against six major currencies was at 77.004 points from 76.925 previously.
The one-month onshore forward premium on the rupee was at 25.50 points from 25.25 on Thursday, the three-month premium was 63.25 points from 61.75 and the one-year premium was 135 points, from 143.25.
The one-month offshore non-deliverable forward contracts were quoted at 50.43, weaker than the spot rupee rate.
In the currency futures market , the most traded near-month dollar-rupee contracts on the National Stock Exchange, the MCX-SX and the United Stock Exchange were all at 50.1650. The total traded volume on the three exchanges was $2.78 billion.