In a highly volatile trade, the rupee touched a record low of 54.30 to a U.S. dollar in intra-day trading on Thursday. However the Indian currency recovered later to finish at 53.64/65 a dollar as the market felt the intervention of the Reserve Bank of India, which was selling the dollar.
The rupee witnessed a depreciation of around 21 per cent between August 1 and December 13, said Arun Singh, Senior Economist, Dun & Bradstreet.
One of the primary reasons behind the strong depreciation of the rupee in the past few months has been attributed to the outflow of foreign funds from the domestic economy.
The protracted debt crisis in some countries of the European Union and its possibility of contagion to others had been a primary factor behind investors' turning towards dollar investments leading to strengthening of dollar.