The Indian rupee fell sharply on Wednesday, slipping past the crucial 90-per-dollar level for the first time ever.
The currency dropped to a new record low of 90.13 against the US dollar, breaking its previous all-time low of 89.9475 touched just a day earlier.
The decline in the rupee came amid weak trade and portfolio flows, along with growing uncertainty over the India-US trade deal.
These factors kept the currency under continuous pressure throughout the session.
The sharp fall in the rupee also weighed on domestic equity markets. The Nifty index slipped below the 26,000 mark -- reflecting cautious sentiment among investors.
The Sensex also dropped nearly 200 points in early trade as the weakening currency raised concerns about inflation and foreign investor activity.
Analysts said that the market mood remained tense as traders watched for signs of stability in the rupee and clarity on trade negotiations between India and the United States.
“The rupee depreciation will halt and even reverse when the India-US trade deal materialises. This is likely this month. A lot, however, will depend on the details of the tariffs to be imposed on India as part of the deal,” analysts stated.
Meanwhile, the Indian stock market opened on a quiet note on Wednesday, with both benchmark indices showing minimal movement in early trade.
The Sensex inched up by just 12 points to 85,151, while the Nifty slipped 18 points to 26,014.
At the opening bell, shares of HUL, Titan, Tata Motors PV, NTPC, BEL, Trent, Bajaj Finserv, Kotak Bank, Ultratech Cement, Maruti Suzuki, L&T, Power Grid, and ITC were among the top losers in the morning session.
“A real concern now, which has contributed to the slow drifting down of the market, is the continued depreciation in the rupee and fears of further depreciation since the RBI is not intervening to support the rupee,” analysts stated.
“This concern is forcing the FIIs to sell despite the improving fundamentals of rising corporate earnings and strong rebound in GDP growth,” they added.