Mumbai, June 7 (PTI) The rupee tumbled 12 paise to close at a fresh lifetime low of 77.78 against the US dollar on Tuesday as a sell-off in domestic equities and stronger greenback overseas dented investor sentiment.
Persistent foreign capital outflows and elevated global crude oil prices also impacted the domestic unit, forex traders said.
At the interbank foreign exchange market, the local currency opened at 77.72 and witnessed an intra-day high of 77.69 and a low of 77.80 against the US dollar.
The local unit finally settled at its all-time low of 77.78, down 12 paise over its previous close of 77.66.
On the domestic equity market front, the BSE Sensex ended 567.98 points or 1.02 per cent lower at 55,107.34, while the broader NSE Nifty declined 153.20 points or 0.92 per cent to 16,416.35.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, rose 0.22 per cent to 102.67.
Brent crude futures, the global oil benchmark, eased slightly by 0.37 per cent to USD 119.07 per barrel.
Foreign institutional investors remained net sellers in the capital market on Tuesday, offloaded shares worth Rs 2,293.98 crore, as per exchange data.
"Indian rupee depreciated today on weak domestic markets and strong Dollar. Equity markets declined by about a per cent.
"Surge in crude oil prices and FII outflows also put pressure on the Rupee. FIIs sold about Rs 2,397 crore yesterday, while crude oil is trading around USD 120/barrel," said Praveen Singh, AVP- Fundamental currencies and Commodities analyst, Sharekhan by BNP Paribas.
Rupee is expected to remain weak on risk aversion in global markets and strong dollar. Dollar jumped as 10-year US Treasury yields climbed over 3 per cent ahead of the US inflation data due on Friday and expectations of 50 bps rate hike in FOMC meeting next week, he added.
"Traders may remain cautious ahead of RBI's monetary policy tomorrow. There are expectations of a 0.1-0.5 per cent rate hike. Rupee may trade in the range of 77.20-78.50 in next couple of sessions..." Singh added.
Gaurang Somaiya, Forex & Bullion Analyst, Motilal Oswal Financial Services, said the rupee continued to trade in a narrow range and marginal weakness was seen ahead of the RBI policy decision on Wednesday.
"Expectation is that the central bank could look to raise rates but investors will be keenly watching governor's commentary. The central bank could continue to maintain a hawkish stance thereby restricting major losses for the rupee.
"We expect the USD/INR to trade with sideways and quote in the range of 77.40 and 78.05," he added.
