Foreign investors are exiting Indian sovereign bonds at a record pace in December, with outflows reaching 14,300 crore (approximately $1.6 billion). This selling is driven by the rupee's depreciation to record lows against the dollar, which erodes foreign returns, and expectations that the central bank may be nearing the end of its interest-rate cut cycle. Investors are reallocating to emerging markets offering higher yields and currency appreciation potential, making the rupee the worst-performing major EM currency this year.