The rupee eased further in midday trade on Friday tracking losses in local equities, which fell after the government announced a capital gains tax increase, dealers said.
At 2:16 pm, the partially convertible rupee was at 39.950/960 per dollar, off an intra-day high of 39.815. It ended at 39.87/88 on Thursday. It hit a five-month low of 40.25 last week.
The benchmark share index extended losses to more than 3 per cent on Friday afternoon, after the government proposed to increase the short-term capital gains tax to 15 per cent from 10 per cent.