Dollar demand from importers, particularly oil importers dragged the rupee lower. Analysts say that the RBI has been intervening in the markets over the past few days in order to stem the slide of the rupee. It may continue to do so, if the rupee breaches the 55 level.

The rupee has been weakening against the dollar in the last few weeks, as the fundamentals of the Indian economy are fast declining. The current account and fiscal account deficit has swelled, while inflation has not yet maintained a stead trend.

Finance Minister has said that the falling rupee was a matter of grace concern and the government was doing its utmost. "Steep fall in the rupee is a great cause of concern and we are watching the situation not sitting idle,” he told reporters on Sunday.

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