Mumbai: Continuing erosion in its value, the Indian rupee dropped sharply by 34 paise to 41.69/70 against the US currency in late morning trade today on sustained and heavy dollar buying by oil refiners amid inadequate supplies.

Weak equity markets and absence of dollar sales from exporters also weighed on the rupee sentiment.

The Interbank Foreign Exchange (forex) market continued to witness active trade with the local currency moving widely between 41.58 and 41.75 in the initial 30 minutes of session.

It resumed sharply lower at 41.59/60 a dollar from its last close of 41.35/36 a dollar.

The rupee touched the lowest intra-day level of 41.75 after August 17,2008 when it hit a low of 41.71 against the greenback. It had closed at 41.76/77 a dollar on April 20, 2008.

Dealers said oil companies were heavy buyers in dollars after global crude oil prices surged to new peaks on a daily basis causing worries about widening trade deficit.

They said there were, however, very low dollar supplies as exporters adopted wait-and-watch policy after sluggish equity markets dashed hopes of any big capital inflows.

World oil prices continued their daily record-breaking run, reaching a fresh intraday peak near $124 a barrel in Asian trade today.
Source : PTI