The rupee depreciated to a record low of 81.23 against the US dollar on Friday, PTI reported. This was the first time that it breached the 81-mark. The currency finished trading at an all-time closing low of 80.98, down 19 paise its levels on Thursday.
Forex traders credited the escalation of geopolitical risk in Ukraine and rate hikes by the United States Federal Reserve and the Bank of England behind the dwindling value of rupee.
On Wednesday, the US Federal Reserve raised its interest rate again by 75 basis points and warned of more hikes as it battles soaring prices, stoking fears of a recession.
“I think that shelter inflation is going to remain high for some time,” Federal Reserve Chair Jerome Powell had said. “We are looking for it to come down, but it is not exactly clear when that will happen. It may take some time. Hope for the best, plan for the worst.”
The Bank of England on Thursday also hiked its base rate by 50 basis points to a 14-year high of 2.25%.
Capital market company ICICI Securities on Thursday said that the rupee is likely to depreciate to 81.50 in the coming month, the Economic Times reported.
“However, possible RBI intervention in the forex market to curb volatility may prevent sharp rupee depreciation,” the brokerage firm said.