Mumbai: Snapping its two-day winning spree, the rupee Tuesday tumbled by 31 paise to a fresh 29-month low of 68.38 a dollar on renewed demand for US currency from banks and importers in view of strong foreign capital outflows.
Sharp fall in domestic stock market also affected the rupee sentiment.
The rupee resumed lower at 68.13 per dollar as against yesterday's closing of 68.07 at the Interbank Foreign Exchange (Forex) market and dropped to 68.43 before finishing at fresh 29-month low at 68.38, showing a loss of 31 paise or 0.46 percent.
The rupee had last ended at 68.80 per dollar on August 28, 2013 after touching 68.85 on the same day during the intra-day trade. The rupee had gained by 23 paise or 0.34 percent in previous two days.
The domestic currency moved in a range of 68.13 and 68.43 per dollar during the day.
Meanwhile, the dollar index was down by 0.09 per cent against a basket of six currencies in the late Asian trade.
The dollar remained steady against the yen in late Asian trade today, with the strength in Asian stocks clearing up market sentiment to invite selling of haven assets.
With investors still feeling the heat from yesterday's Tokyo stocks rally, higher commodities prices and robust gains in Asian shares helped brighten the mood, prompting investors to sell the perceived safety of the Japanese currency. In Tokyo, the Nikkei Stock Average rose 0.2 per cent to 16,054.43.