MUMBAI: The Indian rupee is poised to hit a new lifetime low against the US currency on Monday, as worsening risk sentiment and a tumbling pound lifted the dollar index to its highest since 2002.

The rupee is tipped to open at around 81.30 per US dollar, down from 80.9900 in the previous session.

The local unit had reached a record low of 81.2250 on Friday, prompting the Reserve Bank of India (RBI) to sell dollars, according to traders. The RBI’s intervention aided the rupee to turn briefly higher on Friday.

“It will be another choppy and volatile session. All eyes will be on state-run banks at open,” a trader at a Mumbai-based bank said, alluding to intervention from the RBI through these banks.

“The intervention by RBI at 81.20 was quite forceful and markets will want to know if that level will be protected again,” the trader said, adding, the RBI may not be too inclined to intervene given the “carnage” across Asian currencies.

The dollar index in Asia trading climbed above 114.50, the highest since May 2002, thanks to demand for safe-haven assets and a collapsing British pound.

The pound tumbled to a record low on Monday on fears the new government’s economic plan will stretch its finances to the limit. The rout prompted speculation of emergency response from the Bank of England.

Asian equity gauges fell by as much as 2.4% and futures pointed to more losses for the S&P 500 Index. The offshore Chinese yuan declined below 7.16 to the dollar and the Korean won dropped more than a per cent.

Treasury yields continued to march higher, not benefiting from the risk-off sentiment. The 2-year Treasury yield reached a fresh multi-year high of 4.27% on bets that the Federal Reserve will continue to hike rates aggressively despite the mounting growth risks.