The rupee on Wednesday breached or was close to breaching the 68 mark against the U.S. dollar.
Media reports said that the Sensex of the Bombay Stock Exchange has slipped by more than 300 points in early morning trade, while the Nifty was also said to be in the red territory.
The rupee has also touched the 105 mark against the British pound.
On Tuesday, the rupee plunged further by 94 paise to a record low of 67.18 against the U.S. dollar in early trade on the Interbank Foreign Exchange on strong demand for the American currency from banks and importers and persistent capital outflows.
The rupee had ended down 194 paise at 66.24 against the U.S. dollar after hitting an intra-day low of 66.30 in the previous session.
Forex dealers said besides strong demand for the American currency from importers and banks, dollar”s strength against other currencies overseas amid expectation that the Federal Reserve will soon taper its bond-buying programme weighed on the domestic currency.
They said several measures announced by the government and the RBI failed to check volatility in the rupee.
Weak domestic fundamentals such as record current account deficit concern too put pressure on the rupee, they said.
In order to arrest the rupee slide, RBI had announced measures such as restriction on Indian firms investing abroad and on outward remittances by resident Indians, triggering talks of return of capital control regime.
On the same day, during a debate on the economic situation in the Lok Sabha, Finance Minister P. Chidambaram attributed much of the current economic woes to the stimulus provided to help the industry to tide over the problems emanating from the global financial meltdown of 2008.
Chidambaram said: “Fiscal deficit limits had been breached. The CAD had swelled. These were the two main challenges, apart from the number of other challenges that we had to face.”
He, however, claimed that situation had improved till the unexpected development on May 22, 2013, when the US Federal Reserve announced tapering of bond purchases which sent the emerging markets in a tizzy.
“In the last 12 months there have been days when I have been more upbeat; days when I been more downcast. But the fact is some stability did return to the economy until a completely unexpectedly unexpected event took place on May 22, 2013″, he said.
He attributed tumbling of rupee to that announcement of Federal Reserve.
Meanwhile, global ratings agency Fitch on Monday said India”s fiscal numbers “look weak” and warned of a downgrade if the country is unable to meet the fiscal deficit target. (ANI)