Dollar's strength against some currencies overseas and firming crude oil prices also put pressure on the rupee, dealers said.
Illustration: Uttam Ghosh/Rediff.com
The rupee on Wednesday plunged to all-time low of 70.65 to the US dollar in day trade on heavy month-end dollar demand from importers and foreign capital outflows.
The local currency dropped by 49 paise or 0.70 per cent to close at 70.59 to the dollar at the interbank foreign exchange market, logging its biggest single-day drop since August 13 when it nosedived 110 paise or 1.6 per cent.
The rupee had earlier hit its all-time closing low of 70.16 on Monday.
Consistent dollar demand from banks and importers, mainly oil refiners, following higher crude oil prices, kept the rupee under pressure, dealers said.
"Focus will now shift to India's GDP and fiscal deficit data due to be released on Friday. Near-term range for the rupee is 70.20 and 70.75," Rushabh Maru, research analyst, Anand Rathi Shares and Stock Brokers.
At the interbank foreign exchange market, the rupee opened lower at 70.32 a dollar against 70.10 previously and dropped further to a new low of 70.65 in afternoon deals, down by 55 paise.
Furthermore, dollar's strength against some currencies overseas and firming crude oil prices also put pressure on the rupee, dealers said.
Overseas, the US dollar inched higher against a basket of currencies in early Asian trade, after dipping to a four-week low overnight.
Relief over the US-Mexico trade deal was dimmed by concerns that the China-US trade war will drag on for some time.
The dollar index, which shows greenback's strength against a basket of currencies, was trading up 0.22 per cent at 94.83.
A sharp surge in trade deficit too impacted the rupee. Trade deficit soared to a near five-year high of $18 billion.
Foreign investors pulled out around Rs 1,415 crore from capital markets on Wednesday, provisional exchange data showed.
On Tuesday, the local currency had bounced back in a tepid fashion from the record closing low, gaining 6 paise to end at 70.10 against the US currency.