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The rupee weakened by 14 paise to close at a new lifetime low of 79.59 against the US dollar on Tuesday as a strong greenback overseas and persistent foreign fund outflows continued to weigh on investor sentiment.
This comes a day after the RBI announced measures for international trade settlement in rupees.
At the interbank forex market, the local unit opened weak at 79.55 against the greenback and witnessed an intra-day high of 79.53 and a low of 79.66.
It finally settled at 79.59, down 14 paise over its previous close of 79.45.
This was its fourth straight session of decline.
The dollar index, which measures the greenback's strength against a basket of six currencies, advanced 0.48 per cent to 108.54.
"The Indian rupee hit another record low today even after RBI's measure of cross-border settlement in rupee announcement on Monday to stabilise the currency.
"The fear of recession, foreign capital outflows and high inflation is supporting the king dollar," said Dilip Parmar, Research Analyst, HDFC Securities.
The Reserve Bank of India (RBI) on Monday asked banks to put in place additional arrangements for invoicing, payment, and settlement of exports/ imports in the domestic currency, in order to promote growth of global trade with emphasis on exports from India and to support the increasing interest of the global trading community in the rupee.
On the domestic equity market front, the BSE Sensex ended 508.62 points or 0.94 per cent lower at 53,886.61, while the broader NSE Nifty fell 157.70 points or 0.97 per cent to 16,058.30.
Brent crude futures, the global oil benchmark, fell 2.27 per cent to $104.67 per barrel.
Foreign institutional investors remained net sellers in the capital market on Tuesday, offloading shares worth Rs 1,565.68 crore, as per exchange data.
"The US inflation numbers will be the next set of triggers for the currency market, especially the US dollar and the rupee for further directions.
"The range for the rupee is between 79.55 to 79.85," said Jateen Trivedi, VP Research Analyst at LKP Securities.