The Indian rupee hit its lowest level on Tuesday at 80 rupees to the dollar, a first, while the greenback continued to rise and foreign capital outflows intensified.
The rupee fell to 80.0600 against the dollar soon after trading began, according to data from Bloomberg.
High inflation and rising interest rates in the United States, coupled with fears of an impending recession in the world's largest economy, have pushed the dollar higher in recent weeks on growing appetite greatest of investors for the risk.
The tightening of US monetary policy has intensified the outflow of foreign capital from emerging markets like India, where foreign investors have taken out $30.8 billion net of debt and equity this year.
Data released last week showed the U.S. consumer price index hit a new four-decade high in June, beating market forecasts and fueling expectations of another big hike in interest rates. the Federal Reserve next week.
Record deficit
In a written statement to the Indian Parliament on Monday, Finance Minister Nirmala Sitharaman attributed the sharp drop in the rupee to external reasons.
"Global factors such as the Russia-Ukraine conflict, soaring crude oil prices and tighter global financial conditions are the main reasons for the weakening of the Indian rupee against the US dollar," she said. declared.
But the rise in crude prices has led to a deterioration in the trade balance in a country that imports 80% of its oil needs.
India's trade deficit widened to a record $26.18 billion in June, official data showed last week.
The consumer price index in India, the world's sixth-largest economy, eased slightly to 7.01% in June, after hitting an eight-year high in April at 7.79%.
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