New Delhi

Rupee tasted yet another lifetime low on Friday morning after the US dollar index strengthened to a two-decade high this week, on hopes that demand for safe-haven currency such as the dollar would pick up.

The Rupee opened 25 paise lower from the previous session to touch a record low of 81.09 versus the US dollar, against Thursday's close of 80.86.

Yesterday's depreciation was the biggest single-day fall for the rupee since February 24.

The US Federal Reserve had raised the repo rate by 75 basis points - which is the third consecutive hike of the same magnitude, in line with expectations, which essentially means that investors will move towards the US markets for better and stable returns amid the monetary policy tightening.

The Fed also hinted that more rate hikes were coming and that these rates would stay elevated until 2024.

The US central bank seeks to achieve maximum employment and inflation at the rate of 2 per cent over the long run and it anticipates that the ongoing hikes in the target range will be appropriate.

Raising interest rates is a monetary policy instrument that typically helps suppress demand in the economy, thereby helping the inflation rate decline.

Meanwhile, India's forex reserves are at a two-year low. The reserves have dropped by almost USD 80 billion since the escalation of the Russia-Ukraine tensions into war earlier this year

India's forex reserves have been consistently depleting for the past few months, on account of RBI's likely intervention in the market to defend the depreciating rupee.

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A depreciation in the rupee typically makes imported items costlier.