The rupee hit an all-time closing low of 68.82 on 28 August 2013 while the all-time intraday low stands at 68.8625 seen on 24 November 2016.
Wider current account deficit: Oil is not the only imported commodity that will be impacted by a weakening rupee. The rupee has been one of the worst performers this year among emerging market currencies. While trade tensions and oil prices have triggered a global risk aversion towards emerging market currencies, Prathamesh Mallya, chief analyst, currency at Angel Broking said USA asking India and other countries to stop oil imports from Iran by November 2018 or face sanctions further dented sentiments.
The beleaguered Indian rupee crashed to breach the key psychological level of 69 in the morning trade and slipped further to hit a life-time low of 69.10, a fall of 49 paise during the volatile session on Thursday.
The RBI is suspected to have sold dollars through state-run banks at around the 69.09 rupee level, traders said.
"The Reserve Bank of India [the country's central bank] will have to intervene for macro-economic reasons and for political reasons as the opposition is bound to attack the government over the rupee's record low", he added.
India's assets are caught in a vicious downward spiral, where capital outflows hurt the currency, which then further deter investments.
"Given India's current account deficit, there is a need to fund it, but we are on track for a fifth consecutive month of bond outflows and the equity market has also been experiencing outflows", said Khoon Goh, head of Asia research at Australia & New Zealand Banking Group Ltd.in Singapore.
Despite the rise in CAD, it remains modest relative to GDP and is largely financed by equity inflows, including foreign direct investment, Moody's had said in a note on Thursday, adding that the large foreign exchange reserves provided a good buffer.
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Brent crude futures surged to United States dollars 77.50 a barrel, the highest since 2014, on tight supply.
The US Federal Reserve was the first to initiate this process by scaling down its QE (quantitative easing) programme and starting to increase interest rates in the US.
Higher crude oil prices and a declining rupee are a double whammy for India, forex dealers said.
The RBI, meanwhile, fixed the reference rate for the dollar at 68.9389 and for the euro at 79.6382.
The dollar index, which measures the greenback's value against basket of six major currencies, was up at 95.05.
The local unit, however staged a rebound against the pound sterling to end at 90.05 per pound from 90.45.
The 10-year benchmark bond yield shot-up to multi-year high at 7.94%.