The Indian rupee recovered marginally after carnage in the morning session sent the currency to a record low of 68.75 against the U.S. dollar. Markets also traded off the day's lows, but the BSE Sensex still traded with 300 point cut.
Despite the bloodbath, there's little hope that the rupee and markets have hit a bottom. Frantic attempts by the government and central bank to support the rupee and repeated comments by the finance minister that the currency is oversold have had little impact on markets.
What's more, traders have now set their sight at around 75 levels against the greenback as the government and the central bank dither on bold steps.
Jayesh Mehta of Bank of America Merrill Lynch told NDTV that there are lots of expectations on the fiscal side that something might happen and markets are waiting for some announcements.
"It's been pretty nice talk so far, but no implementation," he said.
Finance Minister P Chidambaram has spoken to foreign investors, the main drivers behind Indian markets, and there's has been better communications between market participants and the government over the last few days, but strong action is yet to come.
On Tuesday, Mr Chidambaram said there is need to "be patient and firm" and the government is doing what is required to be done. He also unveiled a 10-point agenda on reviving the economy in Parliament, but these announcements did little to bolster market sentiments.
The government on Tuesday also decided to set up a task force which will look at the possibility of having currency swap agreements with key trade partners. The move is aimed to bridge India's high current account deficit, but analysts were unimpressed.
"The focus is on how to finance the deficit and not curb it," AV Rajwade told NDTV Profit.
In morning trade, the rupee hit a low of 68.75 as against Tuesday's close of 66.24. Traders also attributed month-end dollar demand from imports and sustained foreign selling in equities by FIIs for the sharp plunge in the rupee.
Wednesday's fall comes after the rupee posted its biggest percentage fall in 18 years. The rupee has lost 17 per cent against the dollar so far this year - making it the worst performer by far among Asian emerging market currencies.
But even as rupee holds centre stage, other factors -- mainly global - are impacting trade today. Among them are the growing concerns over a military intervention in Syria, which not only hit global markets on Tuesday, but also lifted oil and gold prices.
At times of uncertainty, investors often move out of perceived risky assets such as stocks and into supposedly safe havens such as gold.
Asian markets traded sharply lower, with Japan's Nikkei hitting falling 2.4 per cent to a two-month low.
The Syrian crisis comes even as emerging markets have been reeling for the past few weeks on expectations that the U.S. Federal Reserve will reduce its $85 billion a month bond-buying programme as soon as next month.(With inputs from agencies)