Persistent fall in crude oil prices affected the market sentiment
FPIs, which are holding large exposures in Indian debt, could also be expected to book some capital gains as yields slide down
The rupee largely shrugged off the high volatility in stocks and rebounded sharply towards the fag-end trade following bout of dollar selling by exporters
The domestic currency had gained by 80 paise, or 1.19 per cent, in previous five trading days.
Extending losses for the second straight day, the rupee declined by 11 paise to close at more than 3-week low of 66.93 against the US dollar.
The stubbornly high global crude oil prices are opening up a can of worms to heightened inflation risks and likely to disrupt government's fiscal maths along with deteriorating global financial conditions.
The rupee had last ended at 67.22 per dollar on March 16, 2016.
The rupee fell to more than one-month low of 65.75 against the US dollar on Thursday.
The rupee has dropped by 83 paise or 1.24 per cent in three days
The rupee declined marginally by 3 paise to 66.03 per dollar on fresh demand for the US currency from banks and importers.
The dollar index was down 0.01 per cent at 95.86 against a basket of six currencies in early trade
The ballooning of crude prices has significantly increased the country's oil import bill and it can also lead to a worsening of the current account deficit and fiscal deficit for the domestic economy.
Fag-end selling of dollars by banks and exporters
The trading range for the Spot USD/INR pair is expected to be within 66.20 to 67.00.
The domestic currency has gained 9 paise or 0.13 per cent in two days.
The rupee had firmed up 16 paise to close at 67.52 on Thursday.
Dealers attributed the rupee's fall to fresh demand for the US currency from importers
The Reserve Bank of India on Friday decided to leave benchmark interest rate unchanged at 4 per cent but maintained an accommodative stance as the economy faces heat of the second Covid wave.
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