The Indian rupee depreciated 23 paise to hit a record low of 82.40 against the US dollar on Friday as rising oil prices, corporate dollar demand and growing fears of a hawkish Federal Reserve battered the currency this week.

At the interbank foreign exchange, the rupee opened at 82.19 against the greenback, then slipped to 82.33, recording a fall of 16% over its previous close. On Thursday, the Indian currency for the first time settled below the 82 mark against the US dollar.

Also Read | Varroc Engineering falls 9% after firm sells lighting biz at reduced price

The recovery in the dollar index in the last two sessions has not been even the 50% of the fall from the two-decade high of 114.7, but the weakness in the rupee led it to plunge to an all-time low. In case, the dollar index crosses its all-time high, then the USD/INR might hit a new high of around 83 soon.

Also Read | Once upon a time: Rupee’s journey from 4 to 82 a dollar

One of the key factors behind the fall in the rupee is the recovery in the dollar index. Basically, a rising dollar index means that the demand for the US dollar is increasing against the supply of other currencies. Mainly, the six currencies that make up the dollar index. However, the weakness in other emerging market currencies is also linked to the strengthening dollar index.

Also Read | Oil prices fall ahead of US employment update

The second major factor is the sudden hike in crude oil prices. Brent crude, which fell to a low of around $82.5 per barrel on September 26, 2022, amid rising fears over a global recession is now up at around US$94.5 per barrel, a significant increase of around 14% in less than two weeks. Oil prices rose on the back of a “deep” supply cut of 2 million barrels per day by the Organization of Petroleum Exporting Countries and its allies, and are set for more volatility as the US readies response to the move. India is a net importer of crude oil and imports around 80% of the crude oil it consumes.

Also Read | Asian stocks fall as recession fears deepen

The third factor is the World Bank’s weak forecast of India’s GDP for the current fiscal year. World bank downgraded the real gross domestic product (GDP) growth for India to 6.5% for the financial year 2022-23, from the previous 7.5%. A significant cut of 1% in the GDP forecast was surprising considering the resilience that the Indian economy is showing compared to other developed nations. This has also taken a toll on the rupee.