Mumbai, May 7 (NDTV): The rupee breached the 64 per dollar mark to hit its lowest in 20 months on Thursday. It last traded around these levels in September, 2013.
At the day's low, the rupee hit 64.25 per dollar, down 71 paise or over 1 per cent against Wednesday's close of 63.54 per dollar. It is now on course to for a fifth straight day of fall.
Experts say sustained capital outflows in equities have pressured the rupee, which was the best-performing emerging market currency in 2014.
Foreign institutional investors have sold a total of around Rs 13,500 crore in the last 14 sessions (excluding the Sun Pharma-Daiichi deal). They have also been net sellers in the debt market too. FIIs seem to be pulling out money from India over tax notices demanding a Minimum Alternate Tax on capital gains made during previous years. (Read: Sensex, Rupee on the MAT Amid Sustained Capital Outflows)
"I think the real reason is MAT, which has created a sort of fear in the minds of FIIs... The strangest part is the demand has been raised for last seven years, which has not made a good impression," said currency expert AV Rajwade. (Watch: Rupee Under Pressure Due to MAT Concerns, Says AV Rajwade)
Increased demand for dollar from importers and banks also weighed on the rupee, forex dealers said.
Traders told Reuters that the uptick in non-deliverable forwards traded in Singapore was hitting sentiment for the rupee and prompting custodian banks to sell the currency. The one-month non-deliverable forex (NDF) was at 64.35/35 versus Wednesday's close of 64.02.
Most emerging Asian currencies lost ground on Thursday as a global bond rout lifted government bond yields across the region.
As of 2:45 p.m., the rupee traded at 64.16 per dollar. The Sensex was down 205 points to 26,513, while the Nifty traded 72 points lower at 8,025.