Traders said persistent selling by stockists in line with a weakening global trend after Federal Reserve Chairman Ben Bernanke signalled that the central bank may start curbing stimulus programme this year, mainly dragged gold and silver prices down.
The rupee fell to a record low of 59.9350 to the dollar, breaching past its all-time low of 58.98 on June 11.
Indian markets too saw a deep fall as a result of the Federal Reserve's shift in policy and the Nifty and Sensex ended down more then 2.5 per cent in the negative, whereas the Europe is trading in red too.
Even as rupee fell below 56-level against dollar intra-day, Chief Economic Adviser in the Finance Ministry Raghuram Rajan said, there is no need to panic, and RBI takes decisions on whether to intervene in forex markets or not to stabilise the local currency.
This is rupee's lowest closing since 55.45 on November 27, 2012.
The Fed's interpretation of the increase in gas prices is the economist's basic mantra of supply and demand.
Observing that US' economic recovery is proceeding at a moderate pace, US Federal Reserve Board chairman Ben Bernanke said on Wednesday the central bank might need to intervene if policymakers enact short-term spending cuts that hurt growth.
The rupee had ended marginally down by 1 paise at 55.63 against the dollar on alternate bouts of buying and selling amid a fag-end recovery in equities in yesterday's session.
Markets reversed early losses and ended higher as investors picked up beaten down frontline stocks.
Investor wealth on Thursday soared by Rs 1 lakh crore, triggered by heavy buying in the stock market, with the BSE benchmark Sensex surging about 382 points to close at near six-week high levels.
The unemployment rate has edged off its recent peak, but at 9.7 per cent, it is still close to its highest level since the early 1980s.
The list of 22 leaders was compiled in association with Harvard Kennedy School. It also includes Federal Reserve Board Chirman Ben Bernanke, Newark city Mayor Cory Booker, Cisco Systems CEO and Chairman John Chambers and playwright-activist Eve Ensler.
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Whatever it be, an official statement from you clearly defining the extent of the problem, would be in order. At least that in my opinion, sir, would put an end to the uncertainty that is plaguing the financial markets all across the globe. And, sir, as you know, markets abhor uncertainty, for lack of trust is highly corrosive.
Overconfident, overpaid and everywhere - the 2007 vintage of MBAs.
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From India's perspective, a decline in the dollar against the major currencies invariably means appreciation for the rupee.
A day after Federal Reserve Chairman Ben Bernanke announced the rate cut, FIIs bought shares worth over Rs 2,400 crore (Rs 24 billion), lifting the index up by 650 points, one of its biggest intra-day gains.
The Sensex closed with gains of 202.33 points or 1.87% at 11,014.97 above the 11000 level.
The gold and crude oil prices, which have risen to records this year, may ease a little if the US central bank Federal Reserve cut rates at its meeting on Tuesday, an analyst said.The Fed is scheduled to meet today to consider revision of interest rates. The US banking sector regulator has already cut the rate at which it lends to banks by 0.25 per cent to 3.25 per cent at an emergency weekend meeting on Monday.
Rupee, he said, is not in shambles and "we should not be overtly pessimistic".
'Helicopter drop' was first proposed as an alternative to quantitative easing.
Terming the sudden outflow of $5 billion as "unfortunate", Finance Minister P Chidambaram on Tuesday said there should, however, be no room for pessimism as fundamentals of the economy are intact and government is moving ahead on the reforms path.
Government is also will also enter into an agreement with Japan for a $50 billion swap.
The challenge for the RBI in 2024 is likely to be less about containing elevated inflation and more about curbing excessive financial market exuberance and a 'problem of plenty', notes Sajjid Chinoy, Chief India Economist JP Morgan.
US President Barack Obama has nominated Janet Yellen to head the Federal Reserve Board, describing her as one of America's "foremost economists and policy makers".
The rupee's plunging to record level and a sharp fall in the equity market are knee-jerk investor reactions to the US Federal Reserve's saying the it will slow down bond-buying programme in view of improving American economy.
IMF's Chief Economist Gita Gopinath will leave her job in January next year and return to the prestigious Harvard University, according to the global financial institution.
Finance Minister P Chidambaram on Monday said the currency will find its level as steps being taken by the government to contain fiscal and current account deficits will improve investor sentiments.
Investor wealth slumped by Rs 1.55 lakh crore on Thursday today, dragged down by massive selling in the stock markets where nearly seven out of ten shares closed lower.
Firm equity market failed to restrict the rupee's fall against the dollar
sharper-than-expected economic recovery back home, analysts say, can fuel a further rally in domestic cyclicals, industrials, and financials as global central banks continue with their easy money policy.
India's record current account deficit has been a key reason behind why Standard & Poor's and Fitch Ratings cut their outlooks on the country's sovereign rating to 'negative' last year.
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