Rupee breaks below 65 vs dollar, hits 4-month low

The rupee weakened by 29 paise to trade at fresh 4-month low, breaching the 65 level against the US dollar in opening trade after Reserve Bank of India’s (RBI) monetary policy committee (MPC) indicated a series of rate hikes could be in the offing because of rising risks to inflation. 

Besides heavy demand for the American currency from importers, persistent outflows by foreign funds and the dollar's strength against other currencies overseas weighed on the domestic unit.

The dollar traded near a one-week high against a basket of major currencies, rising after minutes of the Federal Reserve's January meeting showed policymakers were more confident of the need to keep raising interest rates.

The dollar index last stood at 90.117, after reaching a high of 90.166, its highest level since February 13. That marked a gain of about 2.2 per cent from a three-year low near 88.25, set last week.

The rupee on Wednesday had claimed some of its lost ground to end higher by 3 paise at 64.76 against the US dollar. 
 

(With inputs from Reuters)