The Indian rupee (INR) hit a new all-time low against the dollar on Monday, trading at INR 81.52 per dollar, down 0.64% from its Friday close of 80.99.
This is the third consecutive session of record low levels for the rupee as the world's major currencies, the yuan, sterling, euro, yen and others, all depreciated against the dollar on fears of a global recession prompted by rising borrowing rates.
The rupee slumped by 30 paise to 81.09 paise against the US dollar on Friday, prompting India's central bank to sell dollars.
Meanwhile, the Bank of Baroda suggested that given the "global backdrop of a strong dollar and continued weakness in other currencies… [the r]upee can further touch 80-a-dollar."
In early trade on Monday, sterling fell by more than 4% to $1.0327 before it regained some ground to about $1.05.
The dollar index - whose basket includes sterling and the yen - reached 114.58 for the first time since May 2002 before easing to 113.73, 0.52% higher than the end of last week.
China's yuan also touched a 28-month low against the dollar on Monday, reported Reuters.
Later this week, the Reserve Bank of India is also expected to raise the repo rate by 0.35 to 0.50 percent.
"The Indian rupee is likely to remain weaker as investors expect that the US Fed will continue to hike interest to cool inflation,” Sriram Iyer, senior research analyst at Reliance Securities, told PTI news.
Meanwhile, India's forex reserves declined $5.219 billion to $545.652 billion for the week ending September 26.
Stock Market Fell Over 1,000 Points
India’s National Stock Exchange (NSE) index also crashed below 17,000 points and the Bombay Stock Exchange (BSE) plunged by more than 1,000 points on Monday.
The Sensex was down 961 points or 1.7% at 57137, and the NSE-Nifty fell nearly 2% to 16978. This was the first time that the Nifty plunged below 17,000 marks since July 22.
As the stock markets tumbled, 700 billion rupees ($85.8 billion) of investors’ money was wiped out.
BSE Sensex, also known as the S&P Bombay Stock Exchange Sensitive Index, consists of the 30 largest and most actively traded stocks. Sensex is the oldest stock market index in India, founded in 1986.
The NSE NIFTY 50 index is a key index of the Indian Stock Exchange. It represents the weighted average of 50 of the largest Indian companies listed on the National Stock Exchange.