Indian rupee dropped as much as 71 paise to hit record low of 83 against the US dollar following consistent strengthening of the greenback. Sharp fall in rupee against the US dollar also led to equity markets erasing intraday gains. The Sensex fell as much as 438 points from day's highest level and Nifty 50 index slipped below 17,500 after crossing 17,600 in morning deals.
Fresh weakness in rupee came after dollar strengthened against all the major currencies of the world after inflation in United Kingdom accelerated to a 40-year high in September as the soaring cost of food squeezed household budgets.
The consumer price index rose 10.1 per cent, compared with 9.9 per cent the previous month, the Office for National Statistics said Wednesday. The new data shows inflation returned to the July peak and is once again at the highest since early 1982.
The increase was driven by food prices, which leapt by 14.5 per cent from a year earlier, the biggest jump since 1980, the ONS said.
The rise increases expectations that the Bank of England will raise interest rates further and faster as it struggles to return inflation to its 2 per cent target.
Pound Sterling weakened on Wednesday after hotter-than-expected consumer price inflation and fears of a deeper recession bolstered expectations of a less aggressive rate hike by the Bank of England in November.
The US dollar held at a 32-year peak against the yen and rose from a two-week trough against a basket of major peers, underpinned by expectations of aggressive US Federal Reserve interest rate hikes.
The British pound fell 0.6 per cent after data showing Britain's annual consumer price inflation inched up to 10.1 per cent in September, news agency Reuters reported.
Back home, rupee opened for trading at 82.29 and fell as much as 59 paise to hit record low against the greenback.
