The rupee on Tuesday morning hit a fresh all-time low of 71.27 against the US dollar.
On Monday, the rupee closed below 71 to a dollar for the first time on Monday as rising crude oil prices and trade war tensions put pressure on emerging market currencies.
The dollar and the yen strengthened on Tuesday as investors bid up safe haven assets amid tensions around global trade and strains in emerging market currencies.
"It seems that the dollar, helped by rising interest rates, and the yen, the typical haven currencies, are supported by the confusion in the rest of the world," said Masafumi Yamamoto, chief currency strategist at Mizuho Securities.
Investors remained on edge over ructions in emerging markets. Currencies including the Argentine peso, Turkish lira, South African rand, Brazilian real, Indonesian rupiah and Indian rupee have suffered in recent weeks.
"If the widespread emerging market confusion causes a downgrade of the economic outlook globally, it's a negative for resource-exporting countries and their currencies, like the Australian dollar and New Zealand dollar, whereas it should be a supporting factor for the dollar and the yen," Mizuho's Yamamoto said.
The Australian dollar fell about 0.25 percent to $0.71935 earlier on Tuesday, not far off a 20-month low of $0.71655 touched during the previous session.
With Reuters inputs
