The rupee nosedived 90 paise to close at an all-time low of 80.87 against the dollar — with the forex market spooked by the likelihood of more rate hikes by the US Federal Reserve till inflation reaches its target of 2 per cent.

Not only the rupee, other currencies also fell against the greenback in the wake of a 75 basis points hike by the Fed and hawkish comments by Fed chair Jerome Powell. In less than 24 hours of the Fed rate hike, the UK and Switzerland central banks jacked up their policy rates.

The Bank of England raised its benchmark rate by 50 basis points, while Switzerland’s central bank carried out its biggest hike ever of 75 basis points. Turkey’s central bank astonished markets as it delivered another massive interest rate cut by 100 basis points despite eye-popping inflation above 80 per cent.

The Dollar Index (DXY) which measures the greenback’s strength against six currencies rose to a 20-year high of 111.81, before softening to around 110.72. A weak equity market in India also hurt sentiments. Powell on Wednesday signalled rate increases even in 2023 against projections of a cut or status quo. The Fed’s dot plot — a chart on each Fed official’s projection of the short-term rate — showed the rates to reach 4.4 per cent by the end of 2022 and 4.6 per cent in 2023, indicating cuts only in 2024.

Amid a global dollar rally, the rupee opened at 80.27 and fell to an all-time intra-day low of 80.87 against the American currency. It finally ended at that level, a fall of 90 paise over the previous close of 79.96.

Forex circles said that the Reserve Bank of India (RBI) did not intervene in the markets. ``There was significant unwinding of shorts in the US dollar after a super hawkish Fed and sell-off in equity markets. The central bank (RBI) seems to have not intervened aggressively,” Anindya Banerjee of Kotak Securities said.

“We expect RBI to step in and contain volatility. Therefore, a range of 80.40 and 81.20 can be seen,’’ Banerjee said. Analysts said the rupee will continue to remain under pressure and is likely to breach the 81 levels, though much will depend on RBI intervention. The Sensex on Thursday ended lower 337 points at 59119.72.