Mumbai: The Indian rupee plunged on Thursday to a new record low of 77.81 against the US dollar on the back of continued selling by foreign institutional investors in stock markets amid rising crude oil prices and rising inflation pressure.
In the interbank foreign exchange market, the partially convertible rupee depreciated by 13 pounds to reach a record low of 77.81 against the US dollar. The previous record low was 77.7975 on May 17th. On Wednesday, the rupee rose 10 pounds to close at 77.68 against the US dollar.
The recent rise in crude oil prices and inflationary pressures have caused the rupee to depreciate.
Inflation has emerged as a major headache for policy makers in India. The rise in crude oil prices has raised concerns about the continued rise in imported inflation.
The Reserve Bank of India (RBI) on Wednesday raised its inflation forecast for the current fiscal year to 6.7 per cent from its previous estimate of 5.7 per cent.
Inflation is likely to remain above the central bank’s upper tolerance limit of 6 percent for the first three quarters of 2022-23, according to new RBI forecasts announced after the Monetary Policy Committee (MPC) meeting.
The inflation rate in the first quarter of the current fiscal year is expected to reach 7.5 percent. It is expected to grow by 7.4 percent in the second quarter. It is estimated to be 6.2 per cent for the third quarter.
“It should be noted that about 75 percent of the increase in inflation expectations can be attributed to the food group. Moreover, the core inflation estimate of 6.7 percent for 2022-23 does not take into account the impact of monetary policy actions. Today, the Governor of the Reserve Bank of India said in a monetary policy statement on Wednesday.