The rupee staged some recovery by 3.30 pm and was last trading at 61.53 to the dollar, on RBI intervention. The currency is expected to remain under pressure on constant worries over the Federal Reserve tapering its asset buying programme and eventually winding down the same.
Dealers say dollar flows from foreign funds has virtually dried up, putting further pressure on the currency.
The recent measures by the Reserve Bank of India to drain liquidity from the banking system in a move to help prevent the rupee from falling, has failed to yield results.
The Indian central bank stunned markets by hiking the marginal standing facility for banks (MSF) to 10.25%, to help battle the falling rupee.
Under the MSF banks were borrowing from the RBI at repo rate, plus 1 per cent, which effectively meant 8.25 per cent. But, with effect from July 17, banks would now have to borrow at 10.25 per cent, which is a good 2 per cent over and above the existing rates.
The Finance Minister today said that there would be more measures to stem the slide in the rupee.