The rupee dipped 32 paise to close at a record low of 81.94 against the US dollar on Thursday amid rising oil prices, corporate demand for the greenback and outflows on defence-related payments.

The rupee could sink below 82 on importer demand for dollars, traders said. Being the third largest importer of oil, a further rise in crude oil would negatively impact the Indian currency.

Oil prices moved around $94 per barrel. Since last week, oil has gained around $10 a barrel.

Other worries for the rupee are trade deficit and volatility in portfolio flows.

On Tuesday, JP Morgan said Indian bonds would continue to be kept on the watchlist of a widely tracked emerging market index, implying that the inclusion would be considered only next year. This was estimated to bring in dollar inflows of around $30 billion. 

At the interbank foreign exchange market, the rupee opened on a positive note at 81.52 before settling to close today at an all-time low of 81.94 against the US dollar.

On Tuesday, the rupee appreciated by 20 paise to end at 81.62 against the US dollar.

The forex market was closed on Wednesday on account of Dussehra.

"Rupee, after appreciating marginally on Tuesday, is again starting to come under pressure. The dollar strengthened after services PMI and private payrolls numbers from the US came in better than estimates," said Gaurang Somaiya, Forex & Bullion Analyst, Motilal Oswal Financial Services.

Major crosses euro and pound continued to witness selling pressure at higher levels. The focus will be on the European Central Bank (ECB) meeting minutes, Somaiya said.

"We expect the USD/INR (Spot) to quote in the range of 81.20 and 82.05," Somaiya added.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, advanced 0.06 per cent to 111.27.