Rupee hits record low, breaches 80 to a US dollar again

New Delhi: Indian rupee again breached the psychologically crucial 80 mark to touch an all-time low of 80.11 in early trade on Monday tracking firmness in the US dollar.
At 10.43 a.m., the rupee traded at 80.020 covering some of its early morning depreciation. On Friday, it closed at 78.87 per US dollar. "The fight to tame inflation is expected to continue in the distant future and the rate hikes are expected to put pressure on the rupee and other emerging market currencies," said Santosh Meena, Head of Research, Swastika Investmart.
The US dollar being the reserve currency of almost all countries is detrimental to other currencies, especially in times of sharp volatility in financial markets as it weakens peer currencies.
In mid-July too, the rupee July slipped below 80 against the US dollar for the first time as high crude oil prices amid tighter global supplies boosted demands for the US dollar.
The US dollar strengthened sharply today after US Federal Reserve Chair Jerome Powell after Federal Reserve Chair Jerome Powell said the central bank won't back off in its fight against rising inflation -- which essentially means a further hike in interest rates.
Powell said in a speech to the central banking conference in Jackson Hole, Wyoming that the US economy will need tight monetary policy "for some time" before inflation is under control.
The Federal Open Market Committee's (FOMC) focus right now is to bring inflation back down to 2 per cent target.
"These are the unfortunate costs of reducing inflation. But a failure to restore price stability would mean far greater pain," Powell said at the conference.
In the backdrop of an over four-decade high inflation, the US Federal Open Market Committee in late July raised its key policy interest rate by 75 basis points to 2.25-2.50 per cent, anticipating that the increase in the interest rates will be "appropriate".
Hiking interest rates typically cool demand in the economy, thereby putting a brake on the inflation rate. The US economy has been going through a rough patch with high inflation and negative growth.
Meanwhile, Indian stocks declined sharply this morning tracking negative cues from global benchmarks which too tanked after Powell's monetary policy guidance.
Paring some of the early trade losses, Sensex and Nifty are currently trading around 1.5 per cent lower from Friday's closing.
Domestic gold too traded weak on Monday, pressured by a stronger US dollar and hawkish US Fed's monetary policy stance. (ANI)