The rupee snapped an eight-day losing streak and closed at 49.88/89 against the US currency, up seven paise from the previous close and above a record intraday low of Rs50.26 against the dollar.

Resuming lower at 50.07/08 a dollar, the rupee hit a new record low during the day, falling to 50.26 against the US currency, as an FII sell-off in the stock markets increased dollar demand.

The rupee later ruled steady and was quoted at Rs50.06/07 a dollar in late morning deals.

The heavy demand for dollar was felt in the forex market and the rupee depreciated by 28 paise to Rs50.26 against the US currency. The domestic currency moved widely in a range of 49.87 and 50.26 in volatile trading.

The Bombay Stock Exchange benchmark indices tumbled by 1,000 points to touch a three-year low at mid-session on aggressive selling by funds.

The forex market continued to witness consistent dollar demand in the face of inadequate supplies, following sustained capital outflows from equity markets.

Heavy selling of dollar by the Reserve Bank of India and an intra-day recovery in the stock markets helped the rupee bounce back from record lows, foreign exchange dealers said.

The rupee was down 186 paise, or 3.87 per cent, against the dollar over the past eight days alone, largely due to sustained capital outflows following a spread of the US market crisis across the globe.