The dollar was weakened to a new low against the on Monday, as the dollar's strength continued unabated amid indications of a longer tightening cycle by the Federal Reserve, dealers said.
Importers made a move to purchase the US dollar, amplifying the weakness of the rupee, which touched a new intraday low of 81.56 per dollar, trading at 81.50 per dollar at 10.10 am IST. It had settled at 80.99 per on Friday. The previous intraday low was 81.26 per dollar.
The index was a fresh 20 year high of 114.50 early on Monday as a combination of a hawkish Federal Reserve and risk aversion caused by the war in Ukraine drove global investors to the greenback. The dollar index was at 112.12 at 3: 30 pm on Friday.
The Federal Reserve raised rates by 75 basis points last week, which took the total rate hike to 300 bps in 2022, and signalled that its tightening cycle could be a longer than anticipated.
The last week of the quarter saw the pound fall to 81.54 levels against the previous close of 80.99 levels after having a dismal week. The local unit made a blitzkrieg move in the last few sessions that marked the rupee's all-time lows, said Ritesh Bhansali, vice-president at Mecklai Financial Services.
The dollar index fell to around the levels of 114.057 levels, making it a herculean leap. He said that the anticipation of central banks prescribing continued interest rate hikes helped fuel the dollar's strength.
A decline in domestic equities also took a toll on the rupee, dealers said. The BSE Sensex and the NSE Nifty were trading 1.5 per cent and 1.7 per cent lower at 10: 10 am.
Dealers said that the Reserve Bank of India had not yet significantly intervened in the foreign exchange market through dollar sales. The central bank is expected to do so and prevent the local unit from weakening further than the 81.50 per dollar mark.
Since February, the RBI has been heavily lowering its foreign exchange reserves in order to protect the rupee from excessive volatility. With the reserves at their lowest level in nearly two years, dealers expect the central bank to dial down its interventions in the For USD INR, 80.90 acts as a support and 81.65 acts as a resistance, said Shinhan Bank s vice-president Global Trading Centre Kunal Sodhani.