The rupee fell to a two-week low on Tuesday, erasing all gains made since the Reserve Bank of India first announced early this month it would defend the currency by tightening cash, reflecting doubts about how long the central bank can sustain the measures.
Falls accelerated in the afternoon session after the RBI left interest rates unchanged and said it will roll back those liquidity tightening measures when stability returns to the currency market.
The RBI announced measures to drain cash in the evening of July 15, and followed up with additional steps on July 23.
The partially convertible rupee was trading at 59.88/90 per dollar at 1:27 pm, after falling to as low as a two-week low of 59.92 to the dollar, below its close of 59.89 on July 15.
The rupee had closed at 59.4150/4250 on Monday.