US dollar reached Rs160 in the interbank market on Wednesday.
The US dollar rose by Rs2.2 at the start of the trading.
The rupee has been falling against the dollar following an agreement with the International Monetary Fund on a $6 billon loan with expected strict conditions including a “market determined” exchange rate.
The rupee’s official exchange rate is supported by the central bank under a de facto managed float system and many analysts consider the currency to be overvalued.
According to data from the State Bank, the central bank’s foreign exchange reserves as of May 3 stood at $8.984 billion, equivalent to less than three months of import payments.