The rupee fell further by 25 paise to 66.71 against the US currency in late morning deals following firm dollar demand from banks and importers.
The Indian rupee opened sharply lower at 66.60 per dollar as against last closing level of 66.46 at the Interbank Foreign Exchange (Forex) market due to the negative sentiment in European and US stock markets.
It dipped further to 66.80 before quoting at 66.71 per dollar at 1030 hrs. It hovered in a range of 66.57 and 66.80 during the morning deals.
Volatile domestic equities coupled with higher dollar overseas impacted the rupee sentiment, dealers said.
The dollar index was up by 0.01 per cent at 96.29 as against a basket of six currencies in the early trade.
"The USD-INR currency pair will continue to get influenced by global forex and domestic equity moves," a dealer said, adding exporters are expected to hedge their US dollar receivables on upticks towards 66.80 per dollar.
It should trade in a range of 66.35-66.85 per dollar for the day, the dealer said.
Oil prices eased in Asian trade today as dealers await the US Federal Reserve's decision on whether to raise interest rate following a mixed August jobs report, analysts said.
Meanwhile, the benchmark BSE Sensex trading marginally lower by 2 points to 25,200.03 at 1030hrs.
