The Rupee was all set to touch a fresh lifetime low with the Indian currency trading at 56.46 to the dollar, just 5 paise away from its historic low of 56.50 reached on May 31.
Persistent dollar demand from crude oil importers saw the rupee dropping by 31 paise to the dollar at 10:15 am IST.
Weak equities also saw sentiments getting adversely affected. The Reserve Bank of India has thus far not been selling dollars. However, the sharp fall on Wednesday in the rupee and this morning's fall might see the Indian central bank stepping in.
Foreign fund flows, which at the beginning of the year had help sustain the Indian currency have also dried up. In fact, the months of April and May saw net outflows from foreign funds.
The rupee is expected to remain under pressure and is likely to continue to weaken as economic fundamentals, particularly the current account deficit and the fiscal deficit continue to rise. Dealers believe that the rupee might cross the 57 mark in the next few days.