Rupee drops to fresh 2-yr low of 48.25

The Indian rupee was down by 44 paise at a fresh two-year low of Rs 48.25 per US dollar in early trade today on persistent demand for the American currency from banks and importers on the back of dollar firmness in overseas market.

The rupee resumed lower at 48.15/16 per dollar on the Interbank Foreign Exchange, as against its previous closing level of Rs 47.81/82 per dollar, before tumbling further to Rs 48.25 per dollar, a level last seen on September 25, 2009, as worries over Europe's debt crisis deepened after ratings agency Standard & Poor's cut Italy's rating.

The domestic currency moved in a range between Rs 48.00 and Rs 48.25 per dollar before quoting at Rs 48.08/09 per dollar at 1030 hours.

Sustained dollar demand from banks and importers mainly affected the rupee value against the dollar, a forex dealer said.

The dollar gained against the euro in the Asian market in early trade after Standard and Poor's downgraded Italy's credit rating.