The rupee declined by 27 paise to a record low of 78.40 (provisional) against the US dollar on Wednesday due to unabated foreign fund outflows and losses in the domestic equities.
A stronger greenback overseas also weighed on the rupee sentiment, forex traders said. However, receding crude prices in the international market restricted the rupee's loss, they added.
At the interbank foreign exchange market, the local currency opened flat at 78.13 against the greenback and witnessed an intra-day high of 78.13 and a low of 78.40.
The domestic unit finally ended at a record low of 78.40, down 27 paise over its previous close. In the previous session, the rupee had settled at 78.13 against the US dollar.
The dollar index, which gauges the greenback's strength against a basket of six currencies, strengthened by 0.05 per cent to 104.48.
Meanwhile foreign portfolio investors pulling out money from the country since the past consecutive eighth-to-nine months is also likely to have put pressure on the domestic currency, analysts said.
So far in June, foreign investors have pulled out around Rs 38,500 crore.
"Rupee fell towards fresh all-time lows especially as the dollar rose against its major crosses. The greenback rose ahead of the Fed Chairman's testimony. The expectation is that the commentary could be hawkish and that could support the dollar at lower levels," said Gaurang Somaiya, Forex and Bullion Analyst, Motilal Oswal Financial Services.
Typically, the Reserve Bank of India intervenes in the market through liquidity management, including the selling of dollars from the foreign exchange reserves, with a view to preventing a steep depreciation in the value of the rupee.
India's foreign exchange reserves for the week that ended on June 10, 2022, declined by $4.59 billion to $596.46 billion, RBI data showed.
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