The Indian rupee fell further by 16 paise to 42.70/71, against the American currency in early trade on Tuesday, extending its losses to fourth day in a row, due to sustained month-end dollar demand amid weakness in equity markets.
At the Interbank Foreign Exchange (forex) market, the local currency resumed weak at 42.66/67 a dollar from its last close of 42.54/55 a dollar and later hit a low of 42.82 level due to lack of dollar supplies.
Forex dealers said the rupee, however, recovered to 42.70/71 a dollar immediately after touching the low as exporters sold dollars.
They said the domestic currency also resisted to move downwards on anticipation of a hike in key lending rates by the central bank in its quarterly review of monetary policy to be released later in the day.
Global oil prices were trading around USD 125 a barrel in Asian trade on Tuesday.
At 1015 hrs, Indian benchmark Sensex was down 239 points following extremely weak global cues.