Rupee tanks 48 paise to close at record low of 78.85 against U.S. dollar

Persistent foreign capital outflows, surge in crude oil prices increase pressure on the domestic currency

The rupee plunged by 48 paise to close at record low of 78.85 (provisional) against the U.S. dollar on Tuesday, weighed down by persistent foreign capital outflows and a surge in crude oil prices.

At the interbank foreign exchange market, the rupee opened lower at 78.53 against the greenback and finally settled at 78.85, down 48 paise from its previous close.

During the session, the rupee touched an all-time low of 78.8550 against the American currency.

"The Indian rupee touched an all-time low against the U.S. dollar amid weak domestic equities and a surge in crude oil prices. Sustained selling by foreign investors also put downside pressure on the rupee," Anuj Choudhary - Research Analyst at Sharekhan by BNP Paribas said.

The rupee is expected to trade on a negative note on risk aversion in domestic markets and continued selling pressure from foreign institutional investors (FIIs). Elevated oil prices may also weigh on the domestic currency, Mr. Choudhary said.

"The Indian rupee touched an all-time low of 78.85 against the U.S. dollar amid dull capital market participation along with FII's outflows in the recent past. A sharp surge in crude oil prices from $105 to $114 also supplied the pressure on rupee skidding down," said Jateen Trivedi, VP Research Analyst at LKP Securities.