The rupee fell 40 paise to an all-time low of 81.93 against the dollar in opening trade on Wednesday, as the American currency strengthened and investors became more risk-averse.

Also, a downward trend in the stock market and considerable foreign money outflows dampened investor enthusiasm, according to forex traders.

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The rupee began at 81.90 versus the US dollar on the interbank foreign exchange, then slipped to 81.93, a drop of 40 paise from its previous close. The rupee stayed in a tight range on Tuesday, finishing 14 paise higher at 81.53 per dollar.

Meanwhile, investors are anticipating the outcome of the RBI’s monetary policy meeting on Friday.

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“The rupee opened weaker on Wednesday as the dollar resumed its upward momentum supported by hawkish Fed talk,” said Sriram Iyer, Senior Research Analyst at Reliance Securities.

The local unit could track the weakness of the Asian and emerging market peers, Iyer said, adding that a delay in local bonds’ inclusion for listing on a major global index this year could also cap gains.

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“The Reserve Bank of India (RBI) may be present to curb volatility,” Iyer noted.

The dollar index, which measures the strength of the US currency against a basket of six currencies, rose 0.40% to 114.55.

Sterling was down over 1% to $1.0634, erasing a tiny 0.4% gain in the previous session and continuing to suffer heavy losses after falling to an all-time low of $1.0327 at the beginning of the week.

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The strengthening dollar drove other currencies to multi-year lows on Wednesday, with the Australian dollar falling to $0.6389, its lowest level since May 2020. The kiwi fell roughly 1% to $0.55645, its lowest level since March 2020.

The Chinese offshore yuan plummeted to 7.2349 per dollar, the lowest level since such data was made available in 2011.

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The euro fell 0.4% to $0.9555, not far from its previous 20-year low of $0.9528, with the fresh flare-up in the eurozone’s gas issue adding to the single currency’s pessimistic outlook.

The Sensex was trading 373.37 points, or 0.65%, lower at 56,734.15, while the Nifty was down 108.20 points, or 0.64%, at 16,899.20. Brent crude futures dropped 1.33% to USD 85.12 per barrel.

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Foreign institutional investors (FIIs) have sold shares worth a net Rs 2,823.96 crore, whereas domestic institutional investors (DIIs) purchased shares worth a net Rs 3,504.76 crore on September 27, as per provisional data available on the NSE.