The rupee opened weak at 56.40 against a dollar and hit a record low of 56.57 at around 1.23 PM at the Interbank Foreign Exchange market, breaching its previous record low of 56.52 set on May 31.
This is the fourth consecutive day of drop in the value of the rupee. The value of the Indian currency has declined sharply since Fitch cut its outlook on India's sovereign ratings to 'negative' from 'stable'.
Fitch has become the second credit ratings agency after Standard and Poor's to cut its outlook, threatening India's investment-grade ratings. Both these agencies assign India the lowest investment grade.
In its mid-quarterly review of the monetary policy announced on June 18, the Reserve Bank of India (RBI) also disappointed the markets by keeping interest rates unchanged.
RBI Governor D Subbarao said recently that the central bank would intervene in the currency markets only to contain volatility of rupee.