Amid surging crude oil prices and rising inflationary pressure, the Indian rupee on Thursday dipped to a new record low of 77.81 against the US dollar on persistent selling by foreign institutional investors in the equities markets.
At the interbank foreign exchange market, the partially convertible rupee slumped by 13 paise to hit a record low of 77.81 against a US dollar.
On May 17, the Indian rupee touched 77.7975. The rupee later got strengthened by 10 paise to close at 77.68 against a US dollar on Wednesday.
The recent surge in crude oil prices and inflationary pressure has led to the decline in the value of rupee.
Inflation has emerged as a major headache for policymakers in India and high crude oil prices raise concern of a sustained rise in imported inflation.
On Wednesday, the Reserve Bank of India (RBI) raised the inflation forecast for the current financial year to 6.7 per cent from its earlier projection of 5.7 per cent.
According to the RBI’s new projection announced after the Monetary Policy Committee (MPC) meeting, 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.
It is projected to remain 7.5 per cent in the first quarter of the current financial year. In the second quarter, it is projected at 7.4 per cent. For the third quarter, it is projected at 6.2 per cent.
“It may be noted that around 75 per cent of the increase in inflation projections can be attributed to the food group. Further, the baseline inflation projection of 6.7 per cent for 2022-23 does not take into account the impact of monetary policy actions taken today,” RBI Governor said.
