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The rupee slipped 1 paisa to an all-time low of 84.38 against the US dollar in early trade on Monday, weighed down by persistent foreign fund outflows and a muted trend in domestic equities.
Forex traders said the rupee is likely to remain under pressure unless there is a softening in the dollar index or a slowdown in foreign fund outflows.
At the interbank foreign exchange, the rupee opened at an all-time low of 84.38 against the greenback, registering a fall of 1 paisa over its previous close.
On Friday, the rupee dropped 5 paise to hit a new lifetime low of 84.37 against the US dollar, registering a decline for the third straight session.
Last week, the rupee came under pressure amid the US elections and sustained foreign fund outflows. Following nearly $12 billion in equity sell-offs in October, foreign funds have continued their retreat in November, with outflows of around $1.6 billion recorded in just the first 10 days.
This trend reflects the overvaluation of Indian equities and disappointing Q2 earnings, CR Forex Advisors MD Amit Pabari said.
"In the medium term, the rupee is expected to trade within the 83.80 to 84.50 range, as the Reserve Bank seems to cap the downside of the rupee with sufficient Forex reserves in its kitty," Pabari added.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading higher by 0.05 per cent at 105.05.
Brent crude, the global oil benchmark, fell 0.37 per cent to $73.60 per barrel in futures trade.
On the domestic equity market front, Sensex was trading 12.47 points, or 0.02 per cent lower, to 79,473.85 points. The Nifty fell 5.65 points, or 0.02 per cent, to 24,142.55 points.
Foreign Institutional Investors (FIIs) were net sellers in the capital markets on Friday, as they offloaded shares worth ₹3,404.04 crore, according to exchange data.
Meanwhile, India's forex reserves declined by $2.675 billion to $682.13 billion for the week ended November 1, the RBI said on Friday.
In the previous week, the overall reserves had dropped by $3.463 billion to $684.805 billion. At September-end, the reserves had hit an all-time high of $704.885 billion.
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