The rupee slumped 98 paise to 70.58 against the US dollar in opening trade on Monday, tracking weak opening in domestic equity market and unabated foreign fund outflows.
Forex traders said, the US-China trade related concerns weighed on the investor community and kept pressure on the Indian rupee.
The massive decline in the Indian rupee was largely a knee jerk reaction to the slump in the Chinese currency after China's central bank allowed currency depreciation after the US decision to impose new tariff on Chinese goods, they said. The rupee opened weak at 70.20 at the interbank forex market and then fell further to 70.58, down 98 paise over its last close. The rupee had settled at 69.60 against the US dollar on Friday.
Domestic equity benchmarks BSE Sensex fell over 531 points to trade below 37,000-mark in early trade on Monday following persistent foreign fund outflows amid negative global cues.
Kashmir issue also spooked investors' sentiment after the authorities stepped up security at vital installations and in sensitive areas, suspended mobile internet services and either "arrested" or "detained" several leaders in fast-paced developments on Sunday night.
The 30-share index was trading 531.94 points or 1.43 per cent lower at 36,586.28; and the broader Nifty fell 171.05 points, or 1.56 per cent, to 10,826.30 in morning session.
In the Sensex pack, Yes Bank, Tata Motors, Vedanta, SBI, Tata Steel, Power Grid, ICICI Bank, ONGC, Reliance and Maruti, were among the major losers, falling up to 8.49 per cent. On the other hand, TCS, Infosys, Bharti Airtel and HDFC were trading in the green.
In the previous session, the 30-share BSE Sensex rose 99.90 points or 0.27 per cent to settle at 37,118.22. Similarly, the broader NSE Nifty gained 17.35 points or 0.16 per cent to end at 10,997.35.
The Reserve Bank will hold its three-day policy meeting, beginning Monday (August 5). It is widely expected to cut the benchmark interest rate for the fourth time in a row to boost the economy at time when key indicators are pointing towards a slowdown, experts said.
Equities on Wall Street too ended on a negative note on Friday last week. Meanwhile, the rupee depreciated by 86 paise to 70.46 against the US dollar (intra-day).
The global oil benchmark Brent crude futures were trading 1.18 per cent lower at 61.16 per barrel.