The rupee tumbled 29 paise to finish at 65.83 to a dollar on sustained capital outflows by foreign funds as fears of a China-led deceleration in global growth and escalating tension between South Korea and North Korea gripped markets.

Besides, strong demand for dollar from importers and banks weighed on the local currency, forex dealers said.

The rupee dropped even as the dollar weakened against other major global currencies overseas amid mounting global economic slowdown worries.

The local currency resumed sharply lower at 65.73 per dollar against yesterday’s level of 65.54 at the Interbank Foreign Exchange (Forex) market.

It moved in a range of 65.91 and 65.69 per dollar in the day's deals.

“The rupee is expected to depreciate as overnight US equities traded weak and closed in red. Negative sentiment in the market also forced local equity to open weak as Asian markets have already opened on a poor note. The range for rupee is seen between 65-66 per dollar today.” a dealer said.

Growing doubts as to whether the US Federal Reserve will be able to raise interest rates next month as once expected, have weighed on the dollar and helped to support the euro.

Against a basket of major currencies, the dollar touched a near 8-week low of 95.436. The dollar index last stood at 95.470.

Against the yen, the dollar fell to its lowest level in nearly six weeks at 122.81 yen. The greenback was last down 0.4 per cent at 122.92 yen.

In New York, the dollar had weakened further yesterday after minutes from a July meeting of Federal Reserve policy makers suggested that several of them may not be ready to raise interest rates in September.

Meanwhile, the benchmark BSE Sensex ended the session down 241.74 points or 0.88 per cent at 27,366.07.

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