The Indian rupee depreciated by 11 paise on Tuesday to touch a record low of 83.95 against the US dollar amid pullout of global funds from Indian markets. The previous all-time low of the rupee was at 83.845 per dollar.

The near ending of the rupee to 84 per dollar has also come on the backdrop of fears of a recession in the US and unwinding of the yen carry trade. 

The rupee was protected to a certain extent by the Reserve Bank of India (RBI), which intervened in the non-deliverable forward, local spot and currency futures markets to prevent sharp depreciation. 

The RBI’s strong support will be needed to shield the local currency from slipping below 84 to the dollar as volatility continues in the global markets.

The rupee came under pressure with foreign portfolio investors (FPIs) withdrawing $1.2 billion from the markets on 5 August. With economic data suggesting the potential of a US recession, the Japanese yen surged to seven-month highs against the dollar as traders aggressively unwound carry trades.

The rupee has depreciated 0.7% in the current financial year.