The rupee hit a record low of 157.35 against the dollar intraday, weakening further from its previous low of 156.90 hit on Monday.

It closed at 157.20/30, lower than Monday's close of 156.85/95.

"Exporters are there, but the import demand is severe. The demand is there from oil and construction-related imports," a currency dealer said.

The rupee has weakened 2.3 percent so far this year. It dropped 2.5 percent last year and 3.9 percent in 2016.

The central bank has bought around $400 million from the market in the first three months of this year to help build reserves and repay some debt.

Dealers said they expect the rupee to gradually weaken and face higher volatility this year due to debt repayments by the government.

Foreign investors sold government securities worth a net 1.8 billion rupees ($11.48 million) so far this year through April 18, central bank data showed.