Surging inflation is a worry for central banks because it eats away at consumers' purchasing power.
At the interbank foreign exchange market, the local currency opened at 80.27, then fell further to an all-time intra-day low of 80.95 against the American currency.
The global equity market, including India, will be eagerly watching the US Federal Reserve meet that will take place on September 20-21 for future directions.
After reaching a record 9.1% in August, inflation may rise into double digits in coming months, economists say.
The ripple effects of this could be seen on Monday in Indian markets, which had a topsy turvy five sessions this week.
It was the second straight increase & 4th rate hike this year, as policy makers move aggressively to cool strongest surge in inflation in more than 4 decades, without derailing world's largest economy
Rupee fell below 80 a dollar mark for the first time in the spot market as it touched 80.05 in the early trade on Tuesday.
US retail inflation topping 9.1% in June could have repercussions for India as the Reserve Bank of India may be forced to increase interest rates to keep pace with the US.
This is exactly what the Reserve Bank of India wanted to avoid and acted just in time raising rates last month but the larger issue is how long the tightening cycle will last.
Markets stumble for fifth day as Fed hike triggers recession fears; Sensex, Nifty close at over 1-year lows
Investors lost Rs 5.54 lakh crore in Thursday's session, with the market capitalisation of all BSE-listed firms standing at Rs 2,39,20,631.65 crore.
Overnight gains in the US markets are expected to charge up local bulls, after the policy rate hike of 75 basis points by the US Federal Reserve came in as anticipated.
Japan's currency has been weakening for months, accelerated by the US Federal Reserve's aggressive monetary tightening to tackle soaring inflation caused by the war in Ukraine and other factors.
Jamie Dimon, chairman of JP Morgan, one of the biggest banks in the world, has asked investors to prepare for an economic hurricane.
The Fed began reducing the holdings on its balance sheet, which had ballooned from less than $900 billion before the crisis to $4.5 trillion.
Rebates or cash payments are being proposed in California, New Mexico, Pennsylvania and elsewhere as states are flush with cash and Americans are facing the highest inflation in four decades.
As money flows out of India, it would affect the exchange rate, weakening the rupee and putting considerable pressure on the already high import prices of crude and raw materials.
Increased selling of the American currency by exporters and banks amid a higher opening in the domestic equity market lifted the domestic currency, dealers said.