Consistent dollar demand from banks and importers, mainly oil refiners, following higher crude oil prices, kept the rupee under pressure. READ MORE: Sensex makes smart recovery to close 28 points higher at 17,996 JPN/Agencies
At the interbank foreign exchange market, the rupee opened at 66.90 a dollar against 66.24 previously and dropped to 68.75 in late morning deals. It recovered some ground in the afternoon after the central bank was said to have intervened but dropped to an all-time intra-day low of 68.85 before ending at 68.80, a fall of 256 paise or 3.86 percent.
In three trading days in a row, the rupee has lost 560 paise, or 8.86 percent, against the dollar. So far in August, it has tanked by 840 paise, or about 14 percent, and in the current year by 1,381 paise or over 25 percent.
Oil prices climbed on fears a military strike against Syria for alleged use of chemical weapons against civilians would disrupt crude supplies from West Asia. Higher oil prices and a declining rupee are a double whammy for India, which imports 80 percent of its crude needs.
The dollar strengthened overseas on likely tapering of bond buying by the US Federal Reserve from next month, putting pressure on the rupee. Sentiment was also hurt by increased capital outflows and fears of a rising subsidy burden with the passage of the Food Security Bill.
The Finance Ministry described the sharp fall in the rupee as a reflection of "irrational sentiment" and said there is no need to panic.
Gold hits record high of Rs 34,500 on weak rupee
Surpassing all previous records, gold scaled to a new peak of Rs 34,500 per ten gram in the bullion market on Wednesday.
However, late selling by stockists reduced the initial gains and the yellow metal closed with a biggest ever single-day gain of Rs 1,900 to Rs 33,900 per ten gram, surpassing the previous high of Rs 32,975 on November 27 last year.
The gold in Singapore, which normally set price trend on the domestic front here, rose by 1.3 percent to 1,433.83 dollar an ounce, the highest since May 14 and silver by 2.6 percent to 25.10 dollar an ounce, a highest since April 15.
Consistent dollar demand from banks and importers, mainly oil refiners, following higher crude oil prices, kept the rupee under pressure.
READ MORE: Sensex makes smart recovery to close 28 points higher at 17,996