Chennai: The increasing global crude oil prices and inflation concern turned slippery for the Indian rupee as it went down against the US dollar on Tuesday.
Further, foreign investors (FII) continued to sell their equity holdings on the bourses.
The Indian rupee opened at Rs 78.50 and went down to touch a fresh record low of 78.68 against the dollar.
As crude prices increase, the rupee may further slip down, analysts said.
The Reserve Bank of India (RBI) intervened by selling dollars to stabilise the rupee rate but the demand for the US currency was high.
According to a report by Emkay Global Financial Services Ltd, a total of $34 billion (FII equities and FII debt) has flown out of India during the last eight months.
As the world faces dollar funding stress, the RBI’s foreign exchange management strategy (spot intervention + Buy-Sell swaps) could backfire, if persisted for long, Emkay Global said.
According to Emkay Global, the Indian rupee performance has been caught between worsening external terms of trade led by oil, a fast-changing global risk environment, sharp foreign portfolio investments (equity) outflows and the RBI’s foreign exchange stance.