Indian rupee hits new record low
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The rupee hits 80.0600 against the US dollar.
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The rupee hit 80.0600 against the US dollar.
The Indian rupee fell to more than 80 per US dollar for the first time in history on Tuesday, as the US dollar extended its rally and foreign capital outflows increased.
According to Bloomberg data, the rupee hit 80.0600 against the US dollar shortly after trading began, up from the previous close of 79.9775.
High inflation and rising interest rates in the United States, combined with concerns about an impending recession in the world's largest economy, have fueled a broad dollar rally in recent weeks as investors become more risk-averse.
Outflows from emerging markets such as India have been exacerbated by tighter US monetary policy, with foreign investors withdrawing a net $30.8 billion in debt and equity this year.
Data released last week showed that consumer price inflation in the US reached a new four-decade high in June, exceeding market expectations and fueling prospects of another significant Federal Reserve rate hike next week.
On her account, Indian Finance Minister Nirmala Sitharaman blamed the rupee's sharp decline on external factors in a written statement to the Indian parliament on Monday.
"Global factors such as the Russia-Ukraine conflict, soaring crude oil prices and tightening of global financial conditions are the major reasons for the weakening of the Indian Rupee against the US dollar," she said.
After reaching an eight-year high of 7.79 percent in April, consumer price inflation in India, the world's sixth-largest economy, eased slightly to 7.01 percent in June.
Despite consecutive interest rate hikes in May and June, price increases have remained well above the central bank's two-to-six percent target range.
In an effort to stabilize the rupee, the central bank has also sold more than $34 billion in foreign currency reserves.
It is worth noting that the Sensex index in India opened lower but recovered to trade 0.17 percent higher on Tuesday morning.
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