Mumbai: The rupee closed in on the psychological 50-level mark as it plunged 65 paise to settle at 49.80/81 against the US currency, the lowest level in the last 28 months, due to heavy dollar demand from importers and some banks amid weak equity markets.
Dealers said heavy dollar demand from importers, mainly oil refiners, and some banks weighed on the rupee.
The BSE benchmark Sensex plunged by 148.45 points, which kept the rupee under pressure right from the onset of the business.
"The rupee closed grossly weak Thursday on fall in equities and dollar buying by oil companies. The Indian Interbank market of USD/INR pair showed vigorous movement," India Forex Advisors CEO Abhishek Goenka said.
"The cracks in the Euro area, mainly between Germany and France, have surfaced regarding a concrete solution for the European debt crisis, which supported the dollar," he said.
"Looking at the global scenario one can expect Rupee to trade near 50.00 levels in coming days and the trading range for the USD/INR will be 49.20 to 50.00," Alpari Financial Services (India) CEO Pramit Brahmbhatt said.
At the Interbank Foreign Exchange (Forex) market, the domestic unit opened lower at 49.25/26 a dollar from previous close of 49.15/16 and gradually moved downwards to settle at 49.80/81, showing a steep fall of 1.32 percent.
The rupee had finished at 49.92/94 on May 4, 2009.
The New York crude oil was trading below USD 87 a barrel in European market Thursday.
The rupee premium for the forward dollar also dropped on fresh receivings by exporters. The benchmark six-month forward dollar premium payable in March ended lower at 89-1/2-91-1/2 paise from Wednesday's close of 97-99 paise and far-forward contracts maturing in September also finished weak at 138-140 paise from 149-151 paise previously.
The Reserve Bank of India fixed the reference rate for the US dollar at Rs 49.7110 and for the euro at Rs 68.0541.
The rupee remained weak and ended sharply lower against the pound sterling to Rs 78.61/63 from last close of Rs 77.65/67.
It also declined further to Rs 68.67/69 per euro from Rs 67.95/97 previously. It, however, fell back against the Japanese yen to Rs 64.84/86 per 100 yen from last close of Rs 64.00/02.