The Rupee hit a fresh low of 85.80 against the greenback on December 27, weighed down a strong month-end demand for the dollar in the non-deliverable forwards (NDF) market, extending the fall for a ninth day in a row.

For the year so far, the Rupee has weakened by 3% against the US dollar, and is set to post annual losses for seventh year in a row. At this pace, Rupee is poised to post its worst month in two years.

With the fall, the INR has broken below the psychologically key level of 85.50 for the first time. The expiry of December currency futures contract is also seen behind the dollar buying, reported news agency Reuters quoting a forex trader, who saw 'expected higher activity from importers at this time of the month.'

Nuvama Institutional has projected that the Rupee could hit 86 against the dollar by end of March, while Kotak Securities says it might breaching that level too.

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