Demonetisation and outflows from emerging markets have hit the rupee hard this month. Photograph:( Reuters )
The rupee crashed to a near 39-month low of 68.84, plummeting by another 27 paise against the US dollar in early trade today, close to surpassing its previous record low of 68.85 on August 28, 2013.
Demonetisation and outflows from emerging markets have hit the rupee hard this month, causing the Reserve Bank of India to intervene in the foreign exchange market.
Forex dealers said besides strong month-end demand for the dollar from importers, continued capital outflows by foreign funds and the dollar's bull run on an imminent hike in the Fed's interest rates weighed heavily on the rupee.
Further, a lower opening of the domestic equity market also put pressure on the rupee, they said.
The rupee had shed 31 paise to close at a new nine-month low of 68.56 against the dollar yesterday.
The Indian currency shrunk 2.92 per cent since Donald Trump's victory in the US Presidential polls earlier this month.
A huge outflow of capital by foreign investors has been weakening the rupee as they apprehend an impact on the economy in the short-term following the India's move to demonetise Rs 500 and Rs 1,000 banknotes.
Surging US bond yields and a strong dollar overseas are also contributing to the rupee's fall.
Meanwhile, the BSE Sensex fell by 145.97 points, or 0.56 per cent, to 25,905.84 points in early trade.