MUMBAI: The rupee is not too far away from hitting 70 to the dollar and could slump even further to a new record by the end of the year, according to an ET Poll, as global investors pull out funds due to growing market uncertainty and worries that the government may ease up on fiscal deficit targets to shore up growth. On Wednesday, the rupee lost about 10 paise, or 0.15%, to the dollar, closing at 68.47, the weakest so far this calendar year, having slumped to a 30-month low during trade.The currency may slide as much as 5% to 72 against the dollar by December, according to three of the investors and economists polled by ET. The median estimate is 69.72 compared with the all-time low of 68.85 set in August 2013.Among emerging market currencies, the rupee was the best performer last year. So far in 2016, it has lost about 3.5%. On Wednesday, the rupee fell as low as 68.67 to the dollar, but it strengthened after what traders said was Reserve Bank of India-directed intervention. Crucially, there is little panic over the rupee’s weakness.Experts said the depreciation isn’t necessarily seen as a bad thing and reflects not just the local economy but the global reality amid shrinking international trade and collapsing commodity prices. Besides, it could also help exports that have fallen for 14 months in a row. Foreign funds have sold a net $1.96 billion of Indian equities and debt this year (until February 16), compared with purchases of $7.21 billion last year, according to data from the depository NSDL.This is also due to rising redemptions in mutual funds elsewhere. “If you are a fund manager and you are seeing redemption, you don’t have a choice,” said Uday Kotak , managing director of Kotak Mahindra Bank. “There is not much option on that. Some of that may also be happening. India’s story is better. India’s macro story is strong, but the micro story is more challenging. Our focus has to be in changing the micro story.” The fall of the currency this time around could take place over a period of time and a sudden plunge as in August 2013 isn’t likely. Investors said macroeconomic fundamentals are much stronger now than they were then.On the other hand, the rupee has been one of the worst-performing currencies in 2016 in terms of total returns including the spot exchange rate and interest income.“Risk aversion has taken centre stage with lower oil and commodity prices since the beginning of this year,” said MS Gopikrishnan, head of FX, rates and credit trading at Standard Chartered Bank. “There have been outflows from emerging market equity and debt funds, mainly on the back of withdrawals from institutional investors.Personally, I expect the rupee to weaken to 69.25 by March.”More than half the poll’s 15 participants peg the rupee at 70 or weaker by yearend while seven expect it to trade at 66.80-69.10. IDBI Bank , Standard Chartered Bank and Kotak Securities were most sanguine, putting the currency at 66.80-68.00 to the dollar by December. Global markets were hit last year as the Chinese currency depreciated suddenly.Although India remains the most preferred among emerging markets by brokerages such as CLSA and Morgan Stanley , fears of the US slipping back into recession and financial market concerns are leading to investors pulling out, analysts said. “Though the trade deficit is expected to be low, foreign investor flows have turned negative, impacting INR,” Gopikrishnan said.With government bond yields at almost the same levels as they were a year or so ago, foreign investors in debt now look to be stuck with their investments yielding no profits.“Rising bond yields are a concern for overseas investors, who now may be looking to exit domestic debt securities amid increased currency market volatility,” said Anindya Banerjee, associate vice-president for currency and interest rate derivatives at Kotak Securities. “Some option trades are already signalling future fund outflows.”Some foreign banks are already cutting option deals, going long on ‘call’ options on behalf of their overseas investors. This implies that market volatility is likely to rise with more fund outflows. One indication of where the non-deliverable forwards market sees the currency in 2021— the five-year rupee is available for 89.