On Monday the rupee closed at a new record closing of 53.97. Dollar demand from crude importers in the last few trading sessions has put severe pressure on the rupee. Easing rules for NRE deposits and FCNRB deposits have failed to stem the fall in the rupee.

Analysts believe that the RBI will have to continue selling dollars, in order to enable recovery in the rupee. However, the central bank would have to at some stage limit the sale of dollars.

India's weakening fundamentals particularly trade deficit and hence the current account deficit have weighed on the rupee. Going forward there is a possibility that the rupee could cross the 55 mark against the dollar on sustained demand for the greenback.

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