The rupee today crashed below the 72-mark to hit an all-time low of 72.12 against the US currency, extending losses as a rout in emerging markets kept investors on edge.
Huge dollar purchases by oil importing companies along with speculative activity largely weighed on the rupee, a currency dealer said.
Investors remained concerned over sustained foreign capital outflows and widening current account deficit in the wake of soaring crude oil prices.
The rupee opened higher at 71.66 but could not sustain the gains and fell sharply to a low of 72.12 at one point in afternoon trade. In pre-close trade, the rupee was quoting at 71.97.
The Reserve Bank of India was not spotted intervening after the rupee pierced the 72 level, two dealers said. It had been suspected of selling dollars earlier in the day.
“There is a panic now, especially among those who are unhedged,” said a forex official at a state-run bank.
The rupee has fallen nearly 2 per cent this month and more than 12 per cent this year.
On Wednesday, the rupee hit yet another closing low of 71.75 as surging oil prices and weak trend in emerging market currencies weighed on sentiments. Intra-day, the domestic unit had plummeted to a historic low of 71.97 a dollar before finding some respite.
Finance Minister Arun Jaitley on Wednesday attributed the fall in the rupee to global factors and stressed that the domestic unit was better off as compared to other currencies.
Forex dealers said besides strong demand for the American currency from importers, concerns of fears of rising fiscal deficit and capital outflows mainly weighed on the domestic currency.
Moreover, weakness in emerging currencies overseas against the dollar too weighed on the domestic currency, they added.
Meanwhile, international Brent crude futures fell 27 cents, or 0.4 per cent, to USD 77 per barrel. A fall in crude prices is seen as positive for India, which imports most of its oil requirements, traders said.