The rupee fell for the second day and depreciated by 28 paise on Tuesday to 61.83 against the dollar which strengthened on expectations US lawmakers would reach a deal to end the debt ceiling impasse.
The dollar was up 0.40% against six major global rivals. The local currency also fell amid weak local stocks and demand for the US currency from importers.
The rupee opened at 61.35 a dollar from the previous close of 61.55 at the interbank foreign exchange market. It moved in a range of 61.26 and 61.94 before settling at 61.83, a fall of 28 paise or 0.45%.
The rupee is at the lowest level since October 9, when it closed at 61.93. On Monday, it fell 48 paise.
"Rupee was seen weakening for the second straight session on account of strength in the US dollar," said Abhishek Goenka, CEO of India Forex Advisors. "There is...speculation in the market that US is likely to come out with a solution before the debt ceiling deadline of 17th October. This has fuelled the gains in the US dollar globally."
The 30-share S&P BSE Sensex closed 59.92 points lower as financial stocks declined on expectations a higher inflation rate would lead to a hike in interest rates. The government said yesterday WPI inflation in September was at 6.46%, a seven-month high.
Foreign institutional investors bought shares worth a net Rs. 730.29 crore yesterday, according to provisional data with the stock exchanges.
"After appreciating for 6 consecutive weeks, this time rupee has started the week on a weak note," said Pramit Brahmbhatt, CEO of Alpari Financial Services India. "The trading range for the USD-INR pair is expected to be within 61.25 to 62.50."