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The Rupee has fallen to a new low of 77.81 against the US dollar

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On Thursday, the Indian rupee fell to a record low of 77.81 against US dollars due to persistent selling by foreign institutional investors in equities markets. This was despite rising crude oil prices and inflationary pressure.
The partially convertible rupee fell by 13 paise at the interbank foreign currency market to reach a record low of 77.181 against the US dollar.
The May 17th record low was 77.7975. The rupee was at 77.68 on Wednesday against the US dollar, having gained 10 paise.
The rupee has seen its value decline due to rising crude oil prices and inflationary pressure.
India’s inflation problem has become a major concern for policymakers. The high prices of crude oil raise concerns about an increase in import inflation.
Wednesday’s inflation projection was raised by the Reserve Bank of India (RBI), to 6.7 percent, from 5.7 percent in its earlier projection.
The RBI’s new projections announced after the Monetary Policy Committee meeting show that inflation is likely not to fall below the bank’s upper tolerance level of 6 percent in the first three quarters 2022-23.
Inflation is expected to remain at 7.5% for the current fiscal year’s first quarter. It is expected to rise to 7.4 percent in the second quarter. It is expected to be 6.2 percent in the third quarter.
“It is worth noting that 75 percent of the inflation projections increase can be attributed the food group. The baseline inflation projection for 2022-23 of 6.7 percent does not account for the effect of monetary policies taken today,” the RBI Governor stated in the monetary statement on Wednesday.

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