MUMBAI: The rupee fell 4 paise to an all-time low of 88.79 (provisional) against the US dollar on Tuesday, pressured by sustained foreign capital outflows amid global trade uncertainties.
However, a steep fall in global crude oil prices, along with a weaker greenback, prevented a sharp decline in the local unit, according to forex traders.
The markets are also awaiting the Reserve Bank of India's (RBI's) Monetary Policy Committee decision, which will be announced on Wednesday.
At the interbank foreign exchange, the rupee opened at 88.73 against the dollar and traded in the range of 88.69-88.80 before settling at 88.79 (provisional), lower by 4 paise against its previous close.
The rupee consolidated in a narrow range and settled lower by 3 paise at 88.75 against the greenback on Monday.
"Constant pressure from FPIs buying dollars brought down the rupee, where the RBI seems to be present, supplying dollars. The rupee has remained vulnerable to the FPIs selling due to the trade trauma seen since August, when US President Donald Trump applied 50 per cent tariffs on Indian Exports," Anil Kumar Bhansali, Head of Treasury and Executive Director, Finrex Treasury Advisors LLP, said.
The range for Wednesday is expected between 88.50 and 89.00, he said.
The RBI meeting is taking place against the backdrop of ongoing geopolitical tensions and the US imposing 50 per cent tariffs on Indian shipments.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading at 97.79, lower by 0.11 per cent.
Brent crude, the global oil benchmark, was trading 1.03 per cent lower at USD 67.27 per barrel in futures trade.
On the domestic equity market front, Sensex dropped 97.32 points to settle at 80,267.62, while Nifty slipped 23.80 points to 24,611.10.
Foreign Institutional Investors offloaded equities worth Rs 2,831.59 crore on Monday, according to exchange data.
Meanwhile, the US has announced the imposition of a 100 per cent tariff on branded or patented drugs entering the US from October 1, except for pharmaceutical companies building manufacturing plants in the US.