Indian rupee ended substantially weak against the US dollar due to fears of an aggressive rate hike by the Federal Reserve after US inflation raced to a 40-year high in January. US inflation surged 7.5% on an annual basis with the consumer price index for all items rising 0.6% in January. Sentiments were fragile with Former Reserve Bank of India Governor D Subbarao's statement that concern today was that the low interest rates and the enormous liquidity available in the system could potentially disrupt financial stability. He added that the challenge for central banks and for the Reserve Bank of India was to juggle between maintain price stability, supporting growth and employment, preserving financial stability and all this in a globalised world. Aggressive FII selling and muted domestic equities also weighed on the local unit. On the global front, dollar rose to an eight-day high on Friday after U.S. inflation surged to a 40-year peak and comments from a Federal Reserve official unleashed a wave of bets on aggressive rate hikes.
Finally, the rupee ended at 75.38 (Provisional), weaker by 44 paise from its previous close of 74.94 on Thursday. The currency touched a high and low of 75.46 and 74.27 respectively.
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