The rupee on Wednesday plummeted by 46 paise to close at about two-week low of 45.40/41 against the dollar with demand for the U.S. currency from importers and banks soaring amid a fall in stocks.

In active trade at the Interbank Foreign Exchange (Forex) market, the domestic currency opened weak at 45.10/11 a dollar from its previous close of 44.94/95.

It later touched a low of 45.47 a dollar before concluding the day at 45.40/41, a steep fall of 46 paise over its last close.

Dealers in foreign exchange said dollar gaining strength in the overseas market weighed down on the local currency.

The dollar index was up by nearly 0.15 per cent against a basket of currencies in Europe on Wednesday.

Meanwhile, the Indian benchmark Sensex on Wednesday snapped its three-sessions gaining streak and ended lower by 151.42 points, or 0.76 per cent. Asian stock markets remained mixed with a downward bias.

Expectations of increased capital outflows amid profit selling by foreign funds ahead of the Christmas holidays, also affected the rupee sentiment.

Fresh dollar buying by importers and some banks also put pressure on the rupee.

Forex dealers said that all eyes are now set on Reserve Bank of India’s mid-quarter monetary policy review to be held on Thursday.

The rupee premium for the forward dollar ended further down on sustained receivings by exporters. The benchmark six-month forward dollar premium payable in May closed lower at 130-132 paise from 134-136 paise on Tuesday.

Far-forward contracts maturing in November also dropped to 228-230 paise from 233-235 paise in the previous session.

RBI fixed the reference rate for the dollar at Rs. 45.32 and the euro at Rs. 60.27.

The rupee recovered to Rs. 71.10/12 against the pound sterling from Tuesday’s close of Rs. 71.32/34 and also firmed up to Rs. 60.44/46 per euro from Rs. 60.52/54 on Tuesday.

It also bounced back against the yen to Rs. 54.05/07 per 100 yen from its last close of Rs. 54.21/23.

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