MUMBAI: The Indian rupee fell to a record low on Thursday, pressured by likely outflows and strong dollar demand from local importers.

The currency declined to a lifetime low of 83.6650 against the U.S. dollar in the latter half of the trading session and ended at a record closing low of 83.6525. It had closed at 83.4550 in the previous session.

A stronger dollar, along with weakness in the Chinese yuan, also hurt the rupee, traders said.

Its decline below the previous all-time low of 83.5750 triggered stop-losses, exacerbating the fall, a trader at a foreign bank said.

The rupee has been hovering around record lows for weeks despite strong growth in the Indian economy, pressured by equity outflows and importers' dollar demand.

"Corporate outflows have been further adding to rupee weakness. Bond inflows are expected to provide some relief in the coming week," Kunal Sodhani, vice president at Shinhan Bank, said.

While foreigners have sold a net of $2.6 billion of local equities so far in 2024, inflows into the debt markets have been strong at $7.5 billion ahead of India's inclusion in the JPMorgan Emerging Market bond index at the end of June.

India's central bank, however, has held the rupee in a tight band, preventing sharp appreciation amid inflows and tempering depreciation during times of outflows.

That support was largely absent on Thursday, allowing the currency to fall, three traders said.

"Some offers (on USD/INR) were present from state-run banks but they were not aggressive," a second foreign exchange trader at a foreign bank said.

The rupee's weakness was in sync with Asian currencies.

The offshore Chinese yuan was down 0.1% at 7.28, its weakest level since November 2023. The dollar index was up 0.2% at 105.4 while U.S. bond yields ticked higher.

The Indian currency's record low won't "be a matter of concern till it is holding above 83.80," Sajal Gupta, executive director and head of forex and commodities at Nuvama Institutional said.

Any further depreciation is expected to be "quite gradual", Gupta said.

(Reporting by Jaspreet Kalra; Editing by Nivedita Bhattacharjee and Mrigank Dhaniwala)