The Indian currency fell to a new low against the US dollar on Wednesday as higher crude prices and foreign capital outflows spurred a sell-off. The rupee was at 21.50 versus the UAE dirham early on Wednesday.
Analysts now expect further weakening with the Indian currency set to hit 80 against the dollar.
The currency pair was last trading at INR78.86 dollar, according to data provider Refinitiv.
"The Indian rupee is expected remain under pressure today amid rising crude oil prices and strong US dollar... The pair is expected to trade within the range of 78.85-79.20 with an upside bias," the Mumbai-based IFA Global Research said in a note.
Sale of the US currency by some state-run bank, likely on behalf of the Reserve Bank of India, capped the rupee's further weakness, Sriram Iyer, a senior analyst at Reliance Securities, said on Twitter.
India’s key equity index BSE Sensex slumped on Wednesday as foreign institutional selling weighed spooked sentiment. Foreign investors have pulled $28 billion from Indian equity markets so far this year.
(Reporting by Brinda Darasha; editing by Seban Scaria)