MUMBAI -- The Indian rupee continued its free fall against the U.S. dollar Thursday, sinking to a new record low for the fourth straight day, as investors fled risk-sensitive currencies due to escalating concerns over Europe's sovereign debt crisis.
The dollar raced past its previous record high of 53.88 rupees, reached Wednesday, and was quoted at 54.21 rupees at 0338 GMT after rising to 54.22 rupees earlier.
Global risk sentiment took a hit after the euro fell below the key psychological threshold of $1.30 Wednesday.
The dollar has gained more than 21% against the rupee since March, making the local unit Asia's worst-performing currency this year. Risk-aversion stemming from the euro-zone crisis has magnified concerns over India's high domestic inflation, slowing economic growth and the possibility of the budget deficit widening.
The rupee's tumble has increased the clamor for action from authorities, with two senior advisers to the prime minister Wednesday calling for the central bank to intervene in the currency market.
While the Reserve Bank of India has maintained that it will only intervene in the currency markets to manage volatility, analysts expect the central bank to announce some measures to boost dollar liquidity at its mid-quarter monetary policy review Friday. The RBI has said it will make a "definitive statement" on the rupee Friday.
