Indian rupee depreciated eight paise on Thursday to settle at an all-time low of 84.50 against the US dollar. The currency was dragged down by a massive sell-off in domestic equity markets and rising crude oil prices amid geopolitical uncertainity.

At the exchanges, the rupee opened at 84.41 and touched its lowest-ever level of 84.51 against the US dollar during the intraday. The session ended at 84.50 against the dollar, surpassing its all-time low of 84.46 on November 14, news agency PTI reported.

Forex traders said the US dollar strengthened as global investors continue to buy the currency in search of a safe haven amid escalating tension between Russia and Ukraine. The continuous outflow of foreign funds also added to the woes of the Indian rupee.

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“We expect the rupee to trade around 84.5 against the dollar by the end of December. A strong dollar continues to create a depreciating bias for currencies globally and is likely to sustain FPI outflows from Indian markets in the near-term. However, interventions by the Reserve Bank of India (RBI), supported by India’s healthy foreign exchange reserves, should help keep rupee volatility in check,” Rajani Sinha, Chief Economist, CareEdge Ratings, told PTI.

The Foreign Portfolio Investors (FPI) pulled out approximately USD 4 billion from Indian markets in November, following a record USD 11 billion outflow in October.

High US treasury yields and a strengthening dollar have contributed to these outflows. Domestic factors like weak corporate earnings and high valuations are added reasons.

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Jateen Trivedi, a research analyst at LKP Securities, said the US government’s allegations against the Adani Group also fuelled the sell-off in the domestic markets.

According to data from the exchanges, FIIs were net sellers in the capital markets on Thursday, as they offloaded shares worth ₹5,320.68 crore.

The 30-share BSE Sensex tumbled 422.59 points, or 0.54 per cent, to close at 77,155.79 points, while Nifty tanked 168.60 points, or 0.72 per cent, to settle at 23,349.90 points.

(With PTI inputs)

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