Mumbai/ Shillong: : With crude oil prices flaring up to around $124 a barrel, the rupee plunged to a more than one-year low of 41.76/ 77 against the dollar as oil companies and importers scrambled for the US currency. The stock markets too reeled under selling pressure as worried investors unloaded stocks on global weakness and the high oil prices. The BSE Sensex fell 259 points to 17,080.65, with IT and banking stocks leading the market rout.

Reacting to the rupee’s steep decline, Reserve Bank of India (RBI) Governor Y V Reddy told reporters after a board meeting in Shillong today that the situation is reflective of “global uncertainties”. “We have discussed the impact of the uncertainties on India,” he added.

The Indian currency lost 41 paise against the greenback, its third successive day of losses. The rupee hit the current level for the first time since April 20, 2007, when it closed at 41.76/ 77 per dollar. “The rupee is likely to move towards the 42.55 level in the short run and will have a negative impact on importers. At the same time, exporters will not make much profits due to the hedge positions they are holding in currency markets,” said Geojit Financial Services head of research Alex Mathew.