The rupee opened at 56.80, losing 50 paise from its previous close of 56.30 Thursday, and dropped further for the fifth consective day Friday to set the record low of 57.33 against the U.S. dollar in afternoon trading. The NSE USD futures hit the intraday high of 57.39 and low of 56.63 on Friday. The rupee set its previous all-time low of 56.57 against the greenback Thursday.
The increasing demand for the dollar from importers and the renewed global risk aversion contributed to the fall of the rupee. The dollar strengthening against the euro also added to the pressure on the rupee.
Analysts expect the rupee will improve against the dollar in the coming weeks.
The rupee was weak, because oil was very high. Now as oil is low, the rupee should become stronger. It might happen that in the next four to six weeks we start seeing a little more strength in the rupee. This is because the oil import bill should logically come down, the Economic Times reported quoting analyst Raamdeo Agarwal.
Several domestic factors such as reluctance of the Reserve Bank of India to cut rates, lack of policy reforms, and downgrading of ratings by rating agencies also weighed heavily on the rupee.
RBI Governor D Subbarao said Tuesday that the banking regulator would continue to intervene in the currency markets to curb volatility, blaming the rupee's fall on both global and domestic factors.
Meanwhile, the Bombay Stock Exchange's benchmark Sensex fell by 129.23 points or 0.76 percent to 16,903.33.