The rupee breached the 63 level against the dollar on heavy capital outflows from the domestic stock market as the retail inflation rose more-than-expected to 5.37 per cent in February.
After opening a tad strong at 62.50 against the previous close of 62.51, the domestic unit slumped to 63 in the afternoon trade before being quoted at 62.98 at 4.30 pm local time.
It hovered in the range of 62.43 and 63.00 in the afternoon trade.
Meanwhile, the Sensex plunged 427.11 points or 1.48 per cent at 28,503.30, as lenders slumped after data showing consumer inflation edged up, raised concerns about interest-rate cuts and sent the bond yields surging.
The annual consumer inflation nudged up to 5.37 per cent in February compared with 5.11 per cent in January.
The local currency edged up to 62.50 per dollar on the back of higher Asian currencies market and improved sentiment after the passage of Insurance Bill in the Rajya Sabha late Thursday evening.
In a major boost to the government’s reform agenda, the Rajya Sabha had on Thursday gave the go-ahead to the Insurance Bill, raising the ceiling for foreign investment to 49 per cent from 26 per cent in the sector.
Also, the IIP (Index of Industrial Production or industrial output) data released on Thursday was better than expected at 2.6 per cent in January, which supported the local currency.
But the rupee sentiment was hit on heavy capital outflows owing to weak retail inflation data.