The Indian rupee continued its downward trajectory for the second consecutive session, closing significantly lower against the US dollar on Thursday. The currency's depreciation was driven by the robust performance of the American dollar and heavy sell-offs in the domestic equity markets.

Market sentiment was dampened as the US Federal Reserve revised its projections for 2025, indicating a more cautious monetary policy approach, which added pressure on emerging market currencies like the rupee. Additionally, data revealed that Foreign Institutional Investors (FIIs) offloaded a net amount of Rs 1,316.81 crore in the capital markets on Wednesday, further weighing on the rupee.

Globally, the US dollar eased slightly on Thursday after hitting a two-year high, following the Federal Reserve's announcement of a slower-than-expected pace of rate cuts in 2025. Meanwhile, the Japanese yen weakened as the Bank of Japan maintained its current interest rates.

The rupee ultimately closed at 85.13 (provisional), marking an 18-paise drop from its previous close of 84.94. During the session, it fluctuated between a high of 85.14 and a low of 84.99.