The Indian rupee posted its biggest single-day loss in nearly two months on Wednesday dragged down by a weak risk appetite and dollar demand from importers.
The currency ended at 82.5825 to the dollar compared with 82.2550 on Tuesday.
In intraday trade, the rupee had fallen to 82.6150 on the back of dollar buying by some state-run banks, likely on behalf of importers, three traders told Reuters.
Possible equity-related foreign outflows also dragged the rupee towards its crucial support level of 82.60, they said.
"At present levels, the Reserve Bank of India (RBI) might not intervene significantly and may wait to align oil and global factors before offloading dollars to prevent further depreciation of the rupee," said Arnob Biswas, FX research head at SMC Global.
The rupee's range may now shift to 82.00 to 83.50 in the coming weeks, Biswas said.
Risk appetite in the region weakened after Fitch Ratings on Tuesday downgraded the US long-term foreign currency ratings to AA+ from AAA, reflecting likely fiscal deterioration over the next three years and repeated down-to-the-wire debt ceiling negotiations.
Analysts, however, did not see a major impact of the downgrade on US Treasuries, which will be a relief for the rupee and other Asian currencies.
Asian equities ended lower, while currencies declined. The Korean won slipped 1 per cent against the dollar. The dollar index extended Tuesday's rise, while US Treasury yields fell.
Dollar rupee forward premiums declined, with the one-year implied yield at 1.56 per cent, three basis points away from year-to-date lows.
Investors now await reports that will provide cues on the US labour market. The US private payrolls data is due later in the day, the initial jobless claims number is out on Thursday and the vital non-farm payrolls report on Friday.