Indian rupee falls most in three weeks

Mumbai: India's rupee dropped the most in three weeks after investors increased sales of local assets as the nation proceeded with its biggest corporate fraud investigation at Satyam Computer Services.

The currency erased all of last week's one per cent gain after stock exchange data showed overseas funds sold Indian shares worth $262.4 million on January 7, the most since October 29.

The benchmark share index lost 12 per cent in the past three trading sessions, the most in such a period since October, after Hyderabad-based Satyam's Chairman Ramalinga Raju admitted last week that he'd fabricated $1 billion in cash and assets.

"The rupee's direction will continue to depend on capital flows," said Arun Kaul, New Delhi-based treasurer at state- owned Punjab National Bank. "There seems to be some pressure on the currency due to recent outflows."

The rupee fell 1.2 per cent to 48.8425 per dollar as of the 5pm close in Mumbai, according to data compiled by Bloomberg. That is the biggest slide since December 24. The currency dropped as low as 48.865 earlier.