The battered rupee hit another record low of 63.12 to the dollar on Monday, and although most analysts see further weakness in the coming months, they say the currency's woes are set to ease.
The move lower came despite attempts last week by India's central bank to shore up weakness in the rupee by tightening rules on how much its citizens and companies can invest abroad, and curbing gold imports.
But the measures only served to deepen the sense of crisis in India, even as Prime Minister Manmohan Singh on Saturday sought to allay concerns that the country was headed for a balance-of-payments crisis similar to the one experienced in 1991.
"The rupee could overshoot to 64 to 65 (to the dollar) in the next few months. That is realistic," said Nizim Idris, currency analyst at Macquarie bank. "But after that, it could come back if we do find stability and we do find India hitting the right notes in terms of adjusting the policies and opening up foreign direct investment some more."
Expectations of a scale back of the U.S. Federal Reserve's stimulus program have also led to sharp capital outflows for India and other emerging markets in recent months, with the rupee being hit particularly hard.