Mumbai, Nov 24 (IANS): Heightened chances of a US rate hike and continued outflow of foreign funds from equities and debt markets plunged the Indian rupee to its new record low of 68.86 to a US dollar during the mid-afternoon trade session on Thursday.

Besides, political bickering over the demonetisation drive and a stalemate on the contours of the Goods and Services Tax (GST) framework led to the erosion in rupee value.

However, an apparent intervention by the Reserve Bank of India (RBI) arrested any further fall in the Indian currency.

On Thursday, the rupee plunged to its new record low of 68.86 to a US dollar (at 1.14 p.m.). The Indian rupee weakened by 22 paise to 68.78-79 (2.30 p.m.) against the US dollar from its previous close of 68.56-57 to a greenback.

"The Indian rupee touched its record low level of 68.86 to a US dollar post 1.00 p.m. due to heightened chances of a US rate hike," Anindya Banerjee, Associate Vice President for Currency Derivatives with Kotak Securities, told IANS.

"Apparent intervention by RBI has arrested further falls and stabilised rupee below the 68.86-mark."

According to Hiren Sharma, Senior Vice President and Head-Forex Advisory at Anand Rathi Financial Services, rupee's fall was in-sync with other currencies which have declined against US dollar. 

"Yesterday's US data and FOMC (Federal Open Market Committee) minutes have strengthened the rate hike scenario in December. Off-loading of debt and equity by FPIs (foreign portfolio investors) has declined rupee," Sharma said.

"But RBI this time around has taken an aggressive stance to halt a complete one way rout. Forward premiums have corrected immensely. In fact, November month, which still has four trading sessions to go, is negative."