PTI Mumbai

The rupee depreciated 12 paise to close at a fresh record low of 85.64 against the US dollar on Tuesday, ending the year with a sharp 3 per cent loss on significant foreign fund outflows and a strong greenback in global markets.

Forex traders said the rupee has been under continued pressure amid the Federal Reserve's cautious stance on rate cuts and the "Trump factor" driving up the dollar index (DXY) and US 10-year bond yields.

Additionally, slowing domestic macroeconomic growth, widening trade deficit and persistent foreign fund outflows have further fuelled the rupee's depreciation.

At the interbank foreign exchange, the rupee opened at 85.54 and touched the lowest level of 85.66 against the greenback during intra-day trade.

The unit ended the session at 85.64 against the dollar, registering a fall of 12 paise over its previous close.

On Monday, the rupee dropped 4 paise to 85.52 against the US dollar.

The domestic unit has depreciated against the greenback by almost 3 per cent from 83.16 on December 29, 2023, to 85.65 on December 31, 2024.

The local currency breached the crucial 84-level on October 10, surpassed the 85-a-dollar mark on December 19 and even touched the lifetime low of 85.80 intraday on December 27, recording the steepest single-day fall in nearly two years.

According to Anuj Choudhary – Research Analyst at Mirae Asset Sharekhan, the rupee is expected to trade with a negative bias on elevated crude oil prices, overall strength in the US dollar and month-end dollar demand from importers.

Moreover, persistent selling pressure by foreign funds added further strain on the currency. FIIs offloaded Rs 4,645.22 crore in the capital markets on a net basis on Tuesday, according to exchange data.