The Indian rupee fell to 17-month lows on Tuesday and weakened beyond 44 per dollar, weighed down by wobbly Asian shares and greater demand for the US unit from oil importers.

The partially convertible rupee was at 44.07/08, a level it last tested on March 20, 2007 and 0.6 percent weaker than Monday's close of 43.79/80.

The rupee has shed 3.3 percent in August, taking its losses to 10.4 percent so far in 2008 and is among the worst performing Asian currencies. It had risen more than 12 percent last year.

"Though exporters are selling at every uptick in the dollar/rupee, the sheer volume of buying by the oil guys is huge but 44 is a pretty strong resistance level," said a senior dealer at a foreign bank.

Worries of more capital outflows from the stock market in the wake of lower Asian markets also hurt sentiment. Foreigners have been net sellers of more than $7 billion of stocks in 2008, a sharp turnaround from 2007 when they bought $17.4 billion.

Asian stocks fell more than 1 percent on Tuesday, after more trouble in the US financial sector, including a ninth bank failure, reminded investors of the frail state of the global economy. - Reuters