In step with the weak stock market, the rupee today plunged by 77 paise to end at over one-month low of 62.39 against the dollar on renewed fears that the US Federal Reserve would look at scaling back its stimulus soon.

Dollar buying by banks and importers picked up after data showed on Tuesday that the Institute for Supply Management’s US non-manufacturing index rose to 55.4 in October.

This data spurred hopes that the US economy is beginning to show strong signs of recovery, which would be followed by the Fed tapering its USD 85 billion a month stimulus.

While capital inflows continued to trickle in, forex traders said the domestic currency was weighed down by other factors such as speculation that RBI would soon start winding down its special forex swap window for oil companies.

The rupee resumed lower at 61.93 per dollar as against the last closing level of 61.62 per dollar at the Interbank Foreign Exchange (Forex) Market.

It dropped further to close at over one-month low of 62.39 per dollar, showing a loss of 77 paise or 1.25 per cent from its last close.

Wednesday’s drop was the sharpest in about two months, dealers said. The rupee moved in a range of 61.82 per dollar and 62.40 per dollar during the day. The rupee had last ended at 62.46 per dollar on October 1, 2013.

“Dollar buying by PSU banks was seen putting pressure on the rupee. Globally, dollar index is seen trading at 80.60 levels and Euro was seen trading flat at USD 1.3500 levels,” said Abhishek Goenka, Founder & CEO, India Forex Advisors.

In the Asia-Pacific region, the rupee was the worst performer as it slid 1.25 per cent versus the dollar on Wednesday.

The Indonesian rupiah slid 0.48 per cent, followed by New Zealand dollar (0.42 per cent down) and Malaysian Ringgit (0.23 per cent).

In the global market, the dollar was quoting lower in the early trade with investors looking ahead to European Central Bank’s policy decision.

In London, the euro rose to a session-high versus the US dollar today after data showed a much bigger-than-expected uptick in German industry orders.