The rupee ends provisionally at its record low of 78.32 against the dollar on Thursday, after closing at that level in the previous session.
That lines up with a broader global risk assets plunge on recession fears.
While Indian equities recouped, but overall performance points to more pain ahead.
PTI reported that the rupee opened at 78.26 and finally settled at its all-time low 78.32, unchanged from its previous close.
On Wednesday, the rupee plunged by 19 paise to settle at an all-time low level of 78.32 against the US dollar.
The Indian rupee erased early morning gains as safe-haven demand drove the greenback ahead of quarter-end adjustments, Dilip Parmar, Research Analyst at HDFC Securities, told PTI.
Mr Parmar further said that there is a high chance of a near bounce amid a fall in commodities, strength in regional currencies and recovery in risk assets.
“Spot USDINR is expected to be in the narrow range of 78.10 to 78.50 before heading towards 79 odd levels,” he addd.
The dollar gained against a basket of major currencies, with the index exceeding 8 per cent for the year, reflecting the broad risk-off sentiment and the dollar’s Fed-driven yield advantage.
Reuters reported quoting traders and analysts that a shortage of cash dollars and forward market intervention by the Reserve Bank of India which has pushed onshore 1-year forward premiums to their lowest levels in more than a decade could pressure the rupee to new lows.
The one-year annualised forward premium stood at 2.91 per cent, compared to its close of 2.82 per cent on Wednesday. It had touched a low of 2.80 per cent in the previous session, its lowest level since Nov. 25, 2011.
“The situation is really bad. There is dollar scarcity which is getting compounded by RBI taking delivery of maturing forward contracts,” the head of forex trading at a private bank told Reuters.