Resuming its slide against the greenback, the Indian rupee plunged to its more than one-year low of 41.76/77 against a US dollar.

Heavy demand for US currency in view of high oil prices continued modestly on its short supply.

The Interbank Foreign Exchange (Durex) market witnessed brisk trade with wide fluctuations in the local currency in a range of 41.55 and 41.79 during the day. The local currency lost 41 paise against the US counterpart.

The rupee resumed sharply lower at 41.59/60 a dollar from its last close of 41.35/36 a dollar. The rupee is hitting this level for the first time since April 20 2007 when it closed at 41.76/77 per dollar.

Meanwhile, the Reserve Bank of India [Get Quote] Governor Dr Y V Redder said the situation is reflective of the “global uncertainties”.

The uncertainties “were flagged and analysed in the RBI policy statement last week. We have discussed the impact of the uncertainties on India,” he added. The rupee’s weakness is contrary to the apex bank’s expectations of it strengthening.

RBI has hiked cash reserve ration to 8.25 per cent, though it is yet to come into effect fully, to tighten money supply. A tighter money supply should have triggered the rupee to move in the opposite direction, a dealer with a private bank said.

Sky-high global oil prices prompted heavy dollar demand from oil refiners and other importers amid inadequate supplies of American currency and a slowdown in capital inflows into sluggish equity markets, dealers said.

Oil companies and importers were forced to cover dollar positions as global crude oil prices surge to new peaks on a daily basis, causing worries about widening trade deficit. They said there was, however, very low availability of dollars as exporters adopted wait and watch policy after weak stock markets dashed hopes of any big capital inflows.