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The rupee on Wednesday fell by 27 paise to a record low of 78.40 against the US dollar due to unabated foreign fund outflows and losses in the stock markets amid the strengthening of the dollar abroad. With capital outflows continuing and central banks hiking rates to tame inflation, experts forecast the rupee crossing the 80 level against the dollar by the year-end.
Amid deteriorating global growth prospects, the sentiment has taken a further hit with the central banks looking to act aggressively in their battle against inflationary forces, analysts said. Foreign portfolio investors (FPIs), who were consistently pulling money out of India over the past 8-9 months, have withdrawn around Rs 41,578 crore in June so far. They have pulled out over Rs 2,60,000 crore since last October.
The dollar index, which gauges the greenback’s strength against a basket of six currencies, strengthened by 0.05 per cent to 104.48. Investors are seen flocking to the safety of the US dollar as consumer price inflation in the UK for last month ticked to a new 40-year high of 9.1 per cent.