This year, foreigners have withdrawn nearly $30 billion from equities. The deterioration of the external financial situation and the strengthening of the dollar also burden the position of the Indian currency

The Indian rupee hit another all-time low as foreign investors continued to sell shares in the country.

The rupee fell to 80.06 against the dollar on Tuesday, before rebounding losses and gaining 0.1% as traders cited possible central bank intervention. The currency has been hit by nearly $30 billion in foreign capital outflows from domestic equities this year – a record amount – and worries about a worsening current account deficit amid rising oil and commodity prices.

Indian politicians have sought to stem the currency’s fall through a variety of measures, from intervention to raising duties on gold imports, with the rupee weakening adding to imported inflationary pressures. Other emerging market currencies are also feeling the pressure as a hawkish Federal Reserve lures capital into the US.

“Risks to the rupee continue to point to a decline,” said Deeraj Neem, an economist and foreign exchange strategist at Australia & New Zealand Banking Group Ltd. The trade imbalance also remains significant.”

The currency has fallen 7% this year as India’s current account deficit – the broadest measure of external finance – is likely to widen to 2.9% of gross domestic product in the fiscal year ending March 31, according to a Bloomberg survey at the end of June. which is almost double the level of the previous year.

India’s central bank advocates an orderly appreciation or depreciation of the currency and is intervening in all market segments to curb volatility, central bank governor Shaktikanta Das said earlier this month.

Strategists Nomura Holdings Inc and Morgan Stanley remain bearish on the rupee, forecasting the currency could fall to 82 per dollar by September. Option pricing suggests that there is a 67% chance that the rupiah will fall to this level between now and the end of December, compared to 50% at the beginning of July.

The Reserve Bank of India has almost $600 billion in foreign exchange reserves, which it uses to protect the rupee. The authorities have raised duties on gold imports and fees on oil exports. The Monetary Authority also announced measures to increase the inflow of foreign exchange into the country and allowed trading in rupees.