UPDATE:Rupee down 44 paise vs $, at 7-week low of 48.88/89

The Indian rupee today virtually touched the crucial 49 level before ending at a seven-week low of 48.88/89 against the US dollar, cheaper by 44 paise, in sympathy with weak local stocks amid heavy capital outflows.

The domestic currency was last seen at this level in May. It had closed at $49.40/42 a on May 15 and settled at $47.88/89 against the in the following trading day.

Generally, the rupee moved in line with equity markets as the Indian benchmark Sensex tumbled by 401 points or 2.83 per cent due to weakness in global stocks in the wake of rising doubts about recovery in the economy.

The Indian unit resumed weak at 48.76/77 a dollar against its last close of 48.44/45 a dollar and later traded in a range of 48.73 and 48.94 during the day.

Dealers at the Interbank Foreign Exchange market said the slide in equity market raised fears of capital outflows even as foreign institutional investors (FII) pulled out sizeable funds on July 7.

They said there was little dollar buying or selling during the day.

Meanwhile, the dollar was flat in early trade on London exchange today as investors turned cautious due to the prevailing global economic situation.

Global oil prices were trading lower at $62.30 a barrel in Asian trade today amid rising concerns that a recovery from global recession may be delayed.

The Reserve Bank of India, however, fixed the reference rate for the US dollar at Rs 48.92 and for the European currency at Rs 67.83.

The rupee premiums on the forward dollar edged up slightly on mild paying pressure from banks and corporates.

The benchmark six-month forward dollar premium payable in December ended at 57-59 paise, up from 56-1/2-58-1/2 paise on Tuesday, and the far-forwards maturing in June also inched up to 108-110 paise from 107-109 paise previously.

In cross-currency trade, the rupee recovered against the pound sterling but declined against the euro and the Japanese yen.

The domestic currency firmed up against the pound sterling to end at Rs 78.64/66 per pound from its previous close of Rs 78.79/81 while its fell against the euro to Rs 68.05/07 from its last close of Rs 67.94/96.

The Indian unit also slipped against the Japanese yen to Rs 51.80/82 per 100 yen from its yesterday's close of Rs 50.83/85 per 100 yen.