The rupee on Wednesday depreciated to 39.60/61 against the US dollar in late morning deals following sustained capital outflows and heavy dollar buying by some multinational banks.
In fairly active trade at the Interbank Foreign Exchange (Forex) market, the local currency opened sharply lower at 39.60/61 a dollar from yesterday's close of 39.5550/5650 a dollar.
Fears of US recession had a negative impact on the rupee, expecting lower exports.
Steep fall in the benchmark Sensex also pushed the rupee downwards. The Sensex was down by over 700 points in early trade. Most most of the other Asian stock indices were also quoted in the red on the back of sharp decline on Wall Street on Tuesday night.
There was some good dollar buying activity by the banks on behalf of their clients to meet their import requirements as the global crude oil was down below $89 a dollar.