The rupee hit a new low of 78.28 in intraday trade and closed below the 78 level for the first time on Monday as foreign investors sold in the equity markets over fears that the US Fed may hike interest rates further.
A forex dealer said that markets were beginning to factor in a further 75-basis-point-increase in interest rates in the United States.
The rupee opened weak, breaching the 77 level as foreign investors sold Indian shares. It crashed to 78.28 in intraday trade before closing at 78.04, 20 paise below Friday’s close of 77.84. It was not just the rupee, many other currencies, including the Japanese yen, Australian dollar and UK pound, fell against the dollar. The dollar index almost touched 105, with most currencies weakening against the greenback.