Mumbai: The Indian rupee slumped to a new record low of 77.81 against the US dollar on Thursday on persistent selling by foreign institutional investors in the equities markets amid a surge in crude oil prices and rising inflationary pressure.
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.
The previous record low stood at 77.7975 touched on May 17. On Wednesday, the rupee had strengthened by 10 paise to close at 77.68 against a US dollar.
The recent surge in crude oil prices and inflationary pressure has led to the decline in the value of the rupee.
Inflation has emerged as a major headache for policymakers in India. High crude oil prices raise a concern about a sustained rise in imported inflation.
The Reserve Bank of India (RBI) on Wednesday raised the inflation forecast for the current financial year to 6.7 percent from its earlier projection of 5.7 percent.
As per 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 percent for the first three quarters of 2022-23.
Inflation is projected to remain at 7.5 percent in the first quarter of the current financial year. In the second quarter, it is projected at 7.4 percent. For the third quarter, it is projected at 6.2 percent.
The RBI Governor said in the monetary policy statement on Wednesday that “It may be noted that around 75 percent of the increase in inflation projections can be attributed to the food group. Further, the baseline inflation projection of 6.7 percent for 2022-23 does not take into account the impact of monetary policy actions taken today,”.