In sync with the steep fall in equity markets, the Indian rupee also slid to quote at 50.59/60, down 55 paise, against the greenback in late morning deals.
Stronger dollar against its major rivals also weighed on the rupee.
In active trade at the Interbank Foreign Exchange (Forex) market, the domestic unit resumed sharply lower at 50.40/42 a $ from its previous close of 50.04/05 and dropped further to quote at 50.59/60 a $.
In the past straight three-session of rally, the rupee had gained a total of 114 paise, or 2.23%, against the US currency.
After rallying nearly 967 points, or 10.10 per cent, in last four-session of winning spree, the benchmark Sensex was today quoted sharply lower by 347 points at 1015 hours, putting pressure on the rupee.
Asian indices were also trading lower between 1.5 per cent and 3.9 per cent in their afternoon trade due to overnight steep fall on Wall Street.
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Meanwhile, global crude oil was trading above $48 a barrel in Asian trade today.
UPDATED AT 1020 HOURS
After a three-day rise, the Indian rupee today depreciated by 33 paise to 50.37 against the US currency in early trade on raised concerns of fresh capital outflows by funds from the domestic bourses.
Dollar's strength against other Asian currencies also put pressure on the Indian rupee.
The ruppe was quoted lower at 50.37/$, down by 33 paise over the previous close of 50.04/05, at the Interbank Foreign Exchange (Forex) market.
Forex dealers said increased demand for the dollar from refiners and importers and hopes of subdued opening on the stock markets in line with weakness on Asian bourses, mainly weighed down the rupee.
The rupee ended 30 paise higher at 50.04/05 against the $ on Monday on firm equity market. The forex and money markets remained closed yesterday on account of "Mahavir Jayanti".