The rupee slumped to a new record low of 72.73 as emerging market currencies remained under pressure with a broad index down near 16-month lows.

“Weakness is set to remain a recurring theme amid global trade tensions, a broadly stronger dollar and prospects of higher US interest rates,” said Lukman Otunuga, a research analyst at broker FXTM.

“With turmoil in Turkey and Argentina triggering contagion fears, appetite for emerging market assets and currencies is likely to continue diminishing.”

The rupee sentiment was also hit on heavy capital outflows, sharp plunge in domestic equities, strengthening of dollar and as crude oil went past $78 per barrel mark.

The domestic unit opened strong by 17 paise at 72.32 at the interbank forex market today. It hovered in a range of 72.73 and 72.25 before ending at 72.69, down 30 paise at 5 pm local time.

The euro rose as easing concerns about Italian debt boosted the single currency for a second day, while broader moves in forex markets were contained as investors fretted about the next developments in the Sino-US trade dispute.

Sterling was the big mover elsewhere, rallying to a fresh five-week high above $1.30 after the European Union chief negotiator's comments on Monday on the prospects of a Brexit deal underpinned demand for the pound.

On Monday, the rupee had slumped to a new record low of 72.67 a dollar intra-day before closing at 72.45, down 72 paise, on growing fears of contagion from an emerging market rout and escalation of global trade war.

Meanwhile, the Sensex crashed 509.04 points or 1.34 per cent to end at over 1-month low of 37,413.13 and the Nifty plunged 150.60 points or 1.32 per cent to 11,287.50 as fears of escalation in US-China trade war kept investors on edge.

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