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MUMBAI: The rupee depreciated further against the dollar on Thursday in tandem with a 265-point fall in the Sensex.

The domestic currency opened at 43.89/90 and touched an intra-day low of 43.9350. It closed at 43.92/9250, lower than Wednesday's 43.88.

Dealers said that the fall in the Sensex is being interpreted as a withdrawal of foreign institutional investors in the forex market.

"Inter-bank players were taking positions and buying or selling dollars based on the movement in the benchmark stock index," said a dealer at a private bank

In the forward market, the 12-month closed at 0.78 per cent (0.75 per cent) and the 6-month closed at 0.87 per cent (0.78 per cent).

In the bond market, prices fell by as much as 30 paise on the back of continued selling.

Dealers said that the liquidity in the system that has reduced to Rs 11,000 crore was a concern.

"Reduced liquidity, a fall in the stock market and expectation of higher domestic inflation figures on Friday caused selling in the market. Globally, Hurricane Rita has also sparked fears of higher oil prices," said a dealer.

The 10.25-16 year-2021 paper opened at Rs 126.46 (7.37 per cent) and ended at Rs 126.13 (7.40 per cent YTM), lower than Wednesday's Rs 126.43 (7.37 per cent YTM).

The 7.37-9 year-2014 paper opened at Rs 102.70 (6.94 per cent YTM) and closed at Rs 102.50. (6.98 per cent YTM), against Wednesday's close of Rs 102.68 (6.94 per cent YTM).

The 7.38 per cent 10-year benchmark 2015 paper was dealt at Rs 102.68 (7 per cent YTM).

The call rate was at 5.10-5.15 per cent (5.05-5.10 per cent). In the one-day reverse repo auction, the RBI received and accepted 22 bids amounting to Rs 11,115 crore.

In the CBLO market, there were 251 trades for Rs 12,110.75 crore in the rate range of 4.85-5.25 per cent.

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