The rupee dived deeper to settle near all-time low at 84.08 (provisional) against the US dollar on Friday weighed down by a firm American currency and unprecedented foreign fund outflows.
Forex traders said the selling rush by foreign investors in pursuit of better gains from the Chinese market sent the domestic equity markets into a tailspin, dragging the benchmark indices down by nearly 8 per cent in the past two weeks.
Also, they said, higher US treasury yields, fear of slower interest rate cut by the Federal Reserve and uncertain geopolitical scenario weeks ahead of the US presidential election have prompted investors to move cautiously.
At the interbank foreign exchange market, the domestic unit opened at 84.07 against the greenback and traded in a tight range of 84.07 to 84.09 during the session.
The unit finally settled at 84.08 (provisional) against the dollar, 1 paisa lower from its Thursday's closing level.
The local currency has touched its lowest closing level of 84.10 against the dollar on October 11.
Anuj Choudhary, Research Analyst at Sharekhan by BNP Paribas, said the rupee is expected to trade with a negative bias on overall strength in the US dollar and sustained FII outflows. "USD-INR spot price is expected to trade in a range of Rs 83.90 to Rs 84.30," he added.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was higher by 0.01 per cent at 103.93.
Brent crude, the international benchmark, climbed 0.51 per cent to USD 74.76 per barrel in futures trade.
On the domestic equity market front, Sensex tumbled 662.87 points, or 0.83 per cent, to settle at 79,402.29 points. The Nifty also dropped 218.60 points, or 0.90 per cent, to 24,180.80 points.
Foreign institutional investors (FIIs) were net sellers in the capital markets on Thursday, as they offloaded shares worth Rs 5,062.45 crore, according to exchange data.
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