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The rupee plunged 40 paise to close at 61.34 against the dollar after the US Federal Reserve indicated that it might hike key interest rates in early 2015.
The Indian unit opened weaker at 61.36 as foreign investors expect the interest rate differential between US and India to reduce.
The dollar index, measured against the basket of world’s major currencies, was trading up 0.34 per cent at 80.26.
“The news (of US hiking rates) spread like the fire in the jungle sending the US Dollar Index to its two week high levels,” India Forex Advisors wrote in their daily note.
The Fed had vowed to keep its rates close to zero for as long as the economy recovered and unemployment in the country fell.
Call Rates, G-Sec
The inter-bank call money rate, the interest rate at which banks borrow money from each other to overcome short-term liquidity mismatches, ended marginally lower at 8.95 per cent against the previous close of 9 per cent.
The 8.83 per cent 10-year benchmark bond maturing in 2023 fell to `100.05 from the previous close of `100.32, while the yield hardened to 8.82 per cent from 8.77 per cent.
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