The Indian rupee fell by 42 paise to a fresh two-year low level of Rs. 48.23 against the US dollar in early trade today amid weakness of the euro as worries over the European debt crisis deepened following Standard & Poor’s downgrade of Italy’s sovereign rating.

Dealers said a slide in the euro against the US dollar after ratings agency Standard & Poor’s slashed Italy’s rating put pressure on the rupee, but a higher opening in the equity market limited the losses.

On Monday, the rupee had tumbled by 55 paise to close at a fresh two-year low of Rs. 47.81/82 against the American currency on strong demand for the greenback as a safe haven investment amid global worries.

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