The growing demand for the US currency from importers and a lack of foreign investors' interest in a weak economy is being cited as the main reason for depreciation.
The partially-convertible rupee slumped to a new record low of 68.02 against the dollar at the inter-bank foreign exchange market in Mumbai, surpassing the previous record low of 66.25 recorded Tuesday.
The rupee later recovered to the 67.91 around 10.11 a.m. The rupee had closed Tuesday at 66.25 -- a depreciation of 2.36 percent from its Monday's close of 64.72 against a dollar.
The free fall in rupee also led to heavy selling in the equities markets. The benchmark index of the Indian equities markets fell by more than 400 points or more than two percent.
The 30-scrip sensitive index (Sensex) of the S and P Bombay Stock Exchange (BSE), which opened at 17,851.44 points, was trading at 17,495.15 points, down 472.93 points or 2.63 percent from the previous day's close at 17,968.08 points.
The Sensex touched a high of 17,851.44 points and a low of 17,448.71 points during trade so far.
The wider 50-scrip Nifty of the National Stock Exchange (NSE) lost 160.30 points or 3.03 percent down at 5,127.15 points.
--IANS (Posted on 28-08-2013)