Rupee fell sharply by 15 paise against the US dollar during the morning trade following a plunge in global equity markets, affected by renewed worries about the US subprime mortgage sector.
In lacklustre activity at the Interbank Foreign Exchange (forex) market, the local currency resumed weak at 40.67/68 a dollar from previous close of 40.52/53 a dollar and later ruled steady at the opening level in late morning deals.
A sharp fall in domestic equity market led to the fall of rupee, forex dealers said.
World markets including Indian bourses went into a tailspin amid concerns that subprime losses would spread after BNP Paribas SA halted withdrawals from funds that owned subprime loan-backed securities.
The stock market benchmark, Sensex, tumbled by 529 points within minutes of start of trading at the BSE.