Dubai: The Indian rupee hovered near a record low on Monday after the Reserve Bank of India (RBI) unexpectedly kept rates steady last week, failing to rescue Asia’s worst performing currency.

The beleaguered currency touched a low of 74.0988 against the dollar, just 13 paise lower than the previous record low of 74.2237 struck on Friday, before closing 0.41 per cent higher at 74.0713.

“We see further USD/INR [US dollar/rupee] upside from current levels. The issue is the same as with other oil-importing emerging markets borrowing in USD. In India’s case, it’s the private sector borrowing in foreign currency that is causing the problem,” Zaid Al Asad, chief investment officer at Harbour Wealth Management, told Gulf News.

“During the boom, borrowing in external currency created a capital inflow that bid up asset prices in a virtuous cycle. The trend is now reversing, and capital is flowing out,”

The Indian currency has shed 15.97 per cent so far in the year, making it the worst-performing currency in Asia.

The fall has been attributed to global and domestic cues, such as monetary policy tightening in the US, resulting in dollar strength and subsequent withdrawal of foreign portfolio investments. Additionally, the rising price of crude oil, which accounts for more than 30 per cent of India’s imports, and the absence of decisive intervention in the market has been driving down the currency.

A weak trade position accompanied by a bulging current account deficit, the difference between the value of exports and imports, has made the rupee’s position even more precarious.

The current account deficit in the first quarter of 2018 widened to $15.8 billion, around 2.4 per cent of the country’s gross domestic product (GDP), higher than the $15 billion recorded in the corresponding quarter a year before.