The rupee dropped 1 paisa to hit a new lifetime low of 84.92 against the US dollar in early trade on Tuesday, weighed down by foreign fund outflows and a muted trend in domestic equities.

Forex traders said the rupee is likely to remain under pressure due to dollar demand from importers and foreign banks.

At the interbank foreign exchange, the rupee opened at 84.89 against the greenback, then fell further to 84.92 against the American currency, registering a fall of 1 paisa over its previous close.

On Monday, the rupee depreciated by 11 paise to close at an all-time low level of 84.91 against the US dollar.

"The Indian rupee is expected to open at its lowest after a record number in respect of imports and a record trade deficit for November 24 mainly on account of increase in gold buying, took rupee lower in the NDF (Non-Deliverable Forward) markets," said Anil Kumar Bhansali, Head of Treasury and Executive Director Finrex Treasury Advisors LLP.

The opening will depend on where RBI supports rupee but the trend indicated weakness. The range for the day is 84.75/00 with a close watch on RBI, Bhansali added.

On the domestic macroeconomic front, India's exports in November contracted by 4.85 per cent year-on-year to USD 32.11 billion, while the trade deficit widened to an all-time high of USD 37.84 billion due to a record surge in gold imports.

The country's gold imports in November reached a record high of USD 14.86 billion, registering a four-fold increase, mainly on account of festival and wedding demands, according to commerce ministry data.

Gold imports stood at USD 3.44 billion in November 2023.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading lower by 0.02 per cent at 106.83.

Brent crude, the global oil benchmark, fell 0.12 per cent to USD 73.82 per barrel in futures trade.

In the domestic equity market, the 30-share BSE Sensex was trading 326.76 points or 0.40 per cent down at 81,421.81 points in morning trade, while Nifty was down 107.50 points or 0.44 per cent to 24,560.75 points.

Foreign Institutional Investors (FIIs) offloaded Rs 278.70 crore in the capital markets on net basis on Monday, according to exchange data.

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