The Indian rupee on Thursday plunged to a new record low of 77.81 against the US dollar on sustained selling by foreign institutional investors in equity markets amid rising crude oil prices and rising inflationary pressure.
At the interbank foreign exchange market, the partially convertible rupee depreciated 13 paise to a record low of 77.81 against the US dollar. The previous record low was 77.7975 which was touched on May 17.
On Wednesday, the rupee had closed 10 paise higher at 77.68 against the US dollar. The recent spurt in crude oil prices and inflationary pressures have led to a fall in the value of the rupee.
Inflation has emerged as a major headache for policy makers in India. Higher crude oil prices have raised concerns about a continued rise in imported inflation. The Reserve Bank of India (RBI) on Wednesday raised its inflation forecast for the current financial year to 6.7 per cent from its earlier estimate of 5.7 per cent.
Inflation is likely to remain above the central bank's upper tolerance limit of 6 per cent for the first three quarters of 2022-23, according to the RBI's new projection announced after the Monetary Policy Committee (MPC) meeting.
Inflation in the first quarter of the current financial year is expected to be 7.5 percent. It is expected to grow at 7.4 per cent in the second quarter. It is estimated to be 6.2 per cent for the third quarter.
“It may be noted that about 75 per cent of the increase in inflation projections can be attributed to the food group. Further, the baseline inflation estimate of 6.7 per cent for 2022-23 does not take into account the impact of today's monetary policy actions. RBI Governor said this in the monetary policy statement on Wednesday.
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