The rupee plunged by 25 paise to settle at over two month low of 66.57 against the US dollar on Thursday on month-end demand for the American currency from importers and banks on the back of higher greenback in overseas markets.
Besides, foreign capital outflows affected the rupee sentiment, forex dealers said.
The domestic unit opened lower at 66.35 as against Tuesday’s closing level of 66.32 at the Interbank Foreign Exchange (Forex) market and dropped further to 66.67 before ending at 2-1/2 month low of 66.57, showing a loss of 25 paise or 0.38%.
The local currency had last ended at 66.82 on September 7, 2015.
The rupee hovered in a range of 66.34 and 66.67 during the day.
The dollar index was up by 0.11% against a basket of six major currencies in late afternoon trade.
Globally, the US dollar firmed up against the basket currencies in early Asian trade, while the euro remained shaky, having slid to its lowest in over seven months on the prospect of further policy stimulus from the European Central Bank (ECB).
However, the dollar stabilised in Asia in late trade after several relatively upbeat US economic indicators pushed the currency higher overnight.
Several US economic indicators released on Wednesday, which were mostly positive, underscored expectations that the Federal Reserve will start raising rates in December and lifted the American currency against the euro and the yen.
Meanwhile, the benchmark BSE Sensex rose by 182.89 points, or 0.71%, to close at 25,958.63.