The Indian rupee dropped 12 paise to a record low of 85.06 against the US dollar in early trade on Thursday. The decline comes in the wake of a hawkish stance from the US Federal Reserve, which has spurred a broad rally in the dollar.

Forex traders indicated that the US Federal Reserve’s adjustment of its projections for 2025, signalling a more cautious monetary policy, is putting pressure on emerging market currencies, including the Indian rupee. The rupee opened weakly at the interbank foreign exchange market and swiftly breached the key 85.00 mark, further sliding to its all-time low of 85.06 against the greenback. This marked a 12 paise fall from its previous close, driven by strong demand for the dollar from importers, foreign fund outflows, and a lacklustre trend in domestic equities, which dampened investor sentiment.