Indian rupee depreciated against the U.S. dollar on Thursday as sustained foreign fund outflows. Foreign institutional investors (FII) were net sellers of shares worth Rs 3,597.38 crore on Wednesday, according to the provisional data available on the NSE. Traders took a note of the government data showing that the Centre's fiscal deficit at the end of November stood at Rs 9.76 lakh crore, or 62.3 per cent of the annual budget target for 2025-26, compared to 52.5 per cent in the year-ago period. Investors overlooked Reserve Bank of India's half-yearly Financial Stability Report stating that the Indian economy is growing at a robust pace, driven by strong domestic demand, low inflation, and the healthy balance sheets of banks. The domestic financial system remains robust and resilient, bolstered by strong balance sheets, easy financial conditions, and low financial market volatility.

Finally, the rupee ended at 89.98 (Provisional), depreciated by 10 paise from its previous close of 89.88 on Wednesday. The currency touched a high and low of 89.99 and 89.93 respectively.