The rupee fell on Wednesday on weak local shares and the re-emergence of worries about global economic growth in the wake of bleak US housing consumer confidence data.
Some traders said dollar outflows, possibly related to US private equity firm Carlyle Group's sale of shares in the Housing Development Finance Corp, added to selling pressure on the rupee.
At 11:14 a.m. (0544 GMT), the rupee was at 49.56/57 to the dollar, down from Tuesday's close of 49.44/45. Traders expect it to move in a 49.30 to 49.80 range in the session.
"Risk aversion associated with weak data from the US and the fall in the euro, alongside a large dollar outflow, is pressuring the rupee," said a senior foreign exchange trader at a private-sector bank.
Data showed c home prices fell more steeply than expected in November, while consumers turned less optimistic in January, highlighting the hurdles still facing the US economy.
"But bear in mind that the rupee rallied sharply last month, so some pause is not surprising. The outlook stays positive," the trader said.
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The rupee rose about 7.4% in January, its best monthly gain in more than 17 years, propelled by a rebound in foreign fund inflows as investors expect monetary easing to accelerate growth in Asia's third-largest economy.
Overseas investors have bought Indian shares worth $2.1 billion so far this year and invested $3.2 billion in debt, according to data from the Securities and Exchange Board of India.
The Sensex was down 0.22% following a sharp rise in the previous session.
One-month offshore non-deliverable forward contracts were at 49.91.
In the currency futures market, the most-traded near-month dollar-rupee contracts on the National Stock Exchange, the MCX-SX and the United Stock Exchange were all around 49.86, on total volume of $1.04 billion.