The rupee tethered on the brink of 82 levels to close again at record lows of 81.94 to the dollar on Wednesday as the US Federal Reserve continues to send strong signals of more tough action to stall inflation.

Market attention has shifted to possible measures before the Reserve Bank of India (RBI) to prevent a further fall in the domestic currency, which has lost nearly 10 per cent of its value this year.

The monetary policy committee of the RBI started its three-day review meeting on Wednesday. At the inter-bank forex markets, the rupee started on a weaker note at 81.88 against the previous close of 81.58 to the greenback, moving with the Dollar Index which hit the day’s high of 114.78. Markets were shaken by assertions by Fed officials that they would not lower their guard on inflation and that controlling prices was their top priority.

After hitting a historic intra-day low of 81.95 against the greenback, the rupee closed at 81.94. FOMC members such as St Louise Fed president James Bullard reportedly said inflation was the key challenge and the credibility of Fed’s inflation-targeting regime was at risk.

A hawkish Cleveland Fed president Loretta Mester warned of volatility in the marketplace in all directions until the Fed gets inflation under control. Both these statements indicated the US central bank is determined to get inflation under control even at the cost of economic growth. In India, forex circles are trying to anticipate future RBI interventions. The RBI has dipped into its reserves to the tune of almost $100 billion to prevent a crash in the rupee, which has resulted in the reserves falling to $545 billion from over $640 billion a year go.

A Reuters report on Wednesday forecast that the reserves will fall another $23 billion to $523 billion by the end of this year. Some analysts said the RBI would not intervene aggressively as before given the prevailing headwinds and the fall in reserves. Dealing room sources said the RBI did not intervene heavily on Wednesday though it sold dollars in the market. Traders are watching if the RBI would protect the 82 level. There is speculation of the RBI coming out with a scheme for NRI deposits like in 2013.

“The 82 figure would be a key level to watch for as the break of the same could open floodgates pushing the rupee to unchartered territory,” said Ritesh Bhansali, vice- president at Mecklai FinancialServices.

“The RBI’s participation to protect the levels of 82 would be keenly watched.” Yuan sinks China’s yuan fell to a 14-year low against the dollar on Wednesday despite central bank efforts to stem the slide after US interest rate hikes prompted traders to convert money into dollars. The yuan fell to 7.2301 to the dollar, its lowest since January 2008. A yuan was worth about 13.8 cents, down 15 percent from this year’s March high.