The rupee on Tuesday fell sharply by 49 paise, or 1.07 per cent, against the US currency, snapping its four-session rally, on the back of weakness in equities amid firm dollar against the euro.
Dollar demand from importers to meet their month-end requirements also weighed on the rupee, a dealer said.
At the Interbank Foreign Exchange (Forex) market, the domestic unit closed at 46.24/25 a dollar, revealing a steep fall of 1.07 per cent over its previous close.
The Bombay Stock Exchange's bellwether Sensex ended lower by nearly 127 points, or 0.71 per cent, mainly impacting the rupee sentiment.
In the New York market, the dollar tumbled against the Chinese yuan yesterday, but turned higher against euro and yen, as investors pondered the implications of China's decision to loosen its de facto peg against the greenback.
Meanwhile, global crude oil prices were trading below $77 a barrel in London.
The rupee premium for the forward dollar rose on fresh paying pressure from banks and corporates.
The benchmark six-month forward dollar premium payable in November closed higher at 70-1/2-72-1/2 paise from 68-70 paise on Monday and far-forward maturing in May too ended up at 127-1/2-129-1/2 paise from 123-125 paise previously.
The Reserve Bank of India fixed the reference rate for the dollar at Rs 46.04 and for the euro at Rs 56.67.
In cross currency trade, the domestic currency turned negative against the pound, the euro and the Japanese yen.
The rupee fell back against the pound to end at Rs 68.07/09 per pound from Monday's close of Rs 67.91/93 and also eased against the euro to Rs 56.75/77 per euro from Rs 56.70/72 previously.
It too dropped against the yen to Rs 50.99/51.01 per 100 yen from its last close of Rs 50.10/12.