Mumbai: The rupee on Friday plummeted by 31 paise to hit an over three-week low of 71.28 against the US dollar after Moody's Investors Services cut India's rating outlook to negative citing growth concerns.
Moody's has changed the outlook on the country's ratings to 'negative' from 'stable', saying there was increasing risks that economic growth will remain materially lower than the past.
At the interbank foreign exchange, the Indian currency opened lower at 71.26 and fell further to 71.33 to the US dollar. It finally settled at 71.28 a dollar, a dip of 31 paise over its previous close.
This was the lowest closing level for the Indian unit since October 16.
On weekly basis, the rupee has weakened by 47 paise against the dollar.
The rupee came under more pressure tracking subdued sentiment in domestic equity market and stronger dollar against key rivals.
The dollar index, which gauges the greenback's strength against a basket of six currencies, rose by 0.17 per cent to 98.31.
However, lower crude oil prices was a sole positive factor for the rupee.
Global crude oil benchmark Brent Futures was trading 1.91 per cent lower at USD 61.19 per barrel.
"India's rupee declined the most in Asia, while sovereign bonds and stocks saw healthy corrections after Moody's Investors Services lowered the nation's rating outlook to negative citing growth concerns," V K Sharma, Head PCG & Capital Markets Strategy, HDFC securities, said.
The reduction comes at a time when investors have been skeptical about the government meeting its budget targets amid a slowdown in tax revenues and September's surprise USD 20 billion tax giveaway for companies, he said.
In the domestic stock market, the BSE benchmark Sensex settled 330.13 points, or 0.81 per cent, lower at 40,323.61. Likewise, the NSE gauge Nifty fell 103.90 points, or 0.86 per cent, to close at 11,908.15.
The 10-year government bond yield was up 0.78 per cent at 6.56 per cent.