The Indian rupee, after falling to a two-year low of 46 in early trade on Monday gained its lost ground and was quoted at 45.85/86 against the greenback in late morning deals owing to weak dollar overseas and a sharp fall in local stocks.

At the Interbank Foreign Exchange market, the local currency resumed stronger at 45.53/55 a dollar from its last close of 45.75/76 a dollar and later touched 45.46 level, buoyed by a sharp fall in dollar against basket currencies.

The rupee, however, again tumbled to 45.85/86 a dollar in late morning deals.

It had last touched this level on October 10, 2006 when it closed at 45.80/81 against dollar.

The Indian rupee fell by 25 paise to 46 against the US dollar in early trade.

Forex dealers said a plunge in Asian stocks and fairly good dollar buying from some banks weighed on the rupee sentiment in early trade.

They said banks bought dollar when the rupee appreciated to 45.46 level immediately after resumption of trading.

Singapore's Strait Times and Taiwan weighted Index was down by about 3.0 to 4.0 per cent in the morning trading while Indian benchmark Sensex fell by more than 5.0 per cent on Monday.

Some Asian markets remained closed today for a public holiday.

The BSE benchmark Sensex today plunged by 772.62 points at 1045 hrs following bankruptcy protection filed by US investment bank Lehman Brothers and weak Asian bourses.