The Indian rupee fell to a two-and-half year low against the US dollar on Wednesday, tracking weakness in other currencies in the region.
The rupee touched a low of 68.62 versus dollar in the early trading session, reaching its lowest level since Aug. 28, 2013. Overall, the rupee has depreciated by more than 3 percent so far this year.
To stem the fall in rupee, the Reserve Bank of India (RBI) was "spotted" intervening in the currency markets by selling dollars through state-owned banks, traders told Reuters.
Rupee has been under pressure for the past few weeks amid massive outflows from the domestic stock markets. So far this year, the benchmark equity indices have fallen by more than 12 percent, tracking sell-off in global markets.
The BSE S&P Sensex traded below 23,000-level on Feb.17, down 3,160 points compared to closing of 26,160 points on Jan. 1, 2016.
Net inflow into equity mutual funds (MFs) had hit a 20-month low last month, as massive sell-off sparked worries among retail investors. Equity MFs witnessed inflows of Rs 2,914 crore in the first month of 2016, while the monthly average inflows stood at Rs 7,550 crore last year.
Concerns over slowdown in China and falling oil prices have made investors to sell equities since the beginning of the year.
Crude oil prices remained under pressure despite major oil exporters Russia and Saudi Arabia agreeing to put a cap on output to shore up prices.
Domestically, rising inflationary pressure and worries over growth have also led rupee to depreciate sharply against the greenback.