Earlier this week, economists told CNBC that they expect the Indian currency to further slide by the end of this year, widening India's oil import bill and deteriorating its trade deficit and current accounts.
Mumbai: The rupee slumped to a fresh record low of 71 against the dollar for the first time ever by falling 26 paise on persistent demand for the USA currency amid rising crude prices.
Month-end dollar demand from importers and rising crude oil prices in the global market during the last couple of sessions mainly pressurised the local currency. The rupee previously had closed at a record low of 70.16 to the dollar on Monday.
The currency opened at a fresh record low of 70.95 per dollar today versus previous close of 70.74.
Analysts pointed out that caution ahead of key macroeconomic data coupled with a rise in demand for USA dollars also dragged the rupee lower.
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Meanwhile, benchmark indices Sensex and Nifty fell for the second consecutive session as investors turned nervous over plunging rupee and rising crude oil prices.
Apart from high crude oil, outflow of foreign funds from the Indian equity and bond markets has had an adverse impact on the rupee..
Brent crude oil gained 12 cents to $77.58 this morning, while West Texas Intermediate was trading at $69.64 at 9.50am in Tokyo, up 13 cents since opening.
The forex market became nervous after reports highlighted risks of India breaching the 3.3 per cent fiscal deficit target for 2018/19.