The rupee had ended at 68.79 against the greenback on Wednesday.

"The rupee was under pressure today due to sharp rise in the dollar index after the Federal reserve ruled out prolonged easing cycle," Press Trust of India quoted Rushabh Maru, research analyst, currency and commodity, Anand Rathi Shares and Stock Brokers, as saying.

Mr Maru further said that "in the short term the rupee might depreciate to 69.80-70 levels on account of weak momentum in the domestic equities. Focus will now shift to the RBI monetary policy."

Unabated foreign fund outflows and disappointing macro-economic data weighed on investor sentiment, the report said citing forex traders.

The government's fiscal deficit touched Rs 4.32 lakh crore for the June quarter, which is 61.4 per cent of the budget estimate for the current financial year.

Foreign institutional investors (FIIs) remained net sellers in the capital markets, pulling out Rs 1,056.55 crore on Thursday, NSE's provisional data showed.

The dollar index, which gauges the greenback's strength against a basket of six currencies, rose 0.35 per cent to 98.85.

The domestic benchmark indices nosedived in Thursday's session on the back of weak global cues. The Sensex plunged as much as 787 points to trade below 37,000-mark for the first time since March 5.

The Sensex plunged 463 points or 1.23 per cent to close at 37,018 and the NSE Nifty 50 Index dropped 1.24 per cent or 105 points to end at 10,980.