The Indian rupee today fell sharply by 40 paise to close at 49.70/71 against the dollar following weakness in local equity markets amid dollar demand from banks.
However, the market ignored the weak dollar overseas and sustained capital inflows.
In active trade at the Interbank Foreign Exchange (Forex) market, the domestic unit resumed higher at 49.25/28 a dollar and immediately touched a high of 49.23.
It later reached a low of 49.72 per dollar before concluding the day at 49.70/71, a fall of 0.81 per cent over its previous close of 49.30/31. The rupee was up by 20 paise on May 12.
Forex dealers attributed the fall in the rupee to sell-offs in local equity markets amid uncertainty on the general election results due on May 16.
The Indian benchmark Sensex ended lower by 138.38 points or 1.14 per cent. Besides Hong Kong, other Asian markets ended better. Dollar buying by state-run banks, mainly by oil refiners, also put pressure on the rupee.
Global crude oil prices were trading over USD 59 a barrel in Asian trade today.
Contrary to market sentiment, the dollar hit a four-month low against a basket of currencies.