Mumbai: The rupee fell to a 5-1/2-year low of 47.71/72 a dollar, hammered by heavy demand for the US currency from foreign banks, despite dollar sales by state-run banks.

The rupee was trading at 47.36/40 per dollar, down 0.6 per cent from its Friday's close of 47.0750/0850 at 10:28 am.

Dealers attributed the fall mainly to foreigners pulling out funds from the share market also hurt sentiment for the rupee. The Bombay Stock Exchange share index fell more than three per cent.

The Bombay Stock Exchange Sensitive Index dived more than six per cent, raising worries of more foreign fund outflows while dollar demand from oil firms also weighed.

Foreign funds, which bought a record $17.4 billion of Indian shares, also offloaded over $9.4 billion from Indian stocks so far in 2008.

Dealers expect the domestic currency to hit 48 to a dollar in the near term, provided the Reserve Bank of India stayed away.