The rupee breached the 77-level for the first time to hit a new low of 77. 3 against the US dollar, raising concerns that a new front has opened up for the economy in the battle against inflation. If the rupee continues to weaken, it will add to inflation as all imports become costlier, and it will also make overseaseducation and international travel expensive.
On Monday, the rupee opened weak at 77.17, tracking weakness in Asian currencies, which corrected in light of depreciating Chinese Yuan. The domestic unit fell to a lifetime low of 77.53 against US dollar before recovering to close at 77.46 on suspected RBI intervention. The greenback posted record gains after last week’s 50 basis points rate hike by US Federal Reserve, resulting in the Dollar Index, which tracks the greenback’s performance against a basket of currencies, hitting a 20-year high.