A strong dollar overseas and some hesitancy in local stocks, however, limited the rupee rise.
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 trading range for the Spot USD/INR pair is expected to be within 66.20 to 67.00.
In a move that may take some sheen off derivative deals, the Reserve Bank of India on Friday proposed to increase the provisioning requirements for banks for off-balance sheet items such as forex and interest-rate derivatives and gold trading. Higher provisioning will make bankers cautious while hawking derivatives, which have been the source of growing controversy between some banks and companies, since they will now be required to set aside more capital and raise costs.
The rupee edged higher by three paise to 66.46 against the US dollar in early trade on Wednesday.
Rupee is under pressure against the dollar on weak cues.
Bullion traders said subdued demand at current levels and a weak global trend mainly pulled down both gold and silver prices.
The rupee is trading weak against the dollar in afternoon trade.
The markets had touched their highest levels in a month.
Unwinding of long dollar positions ahead of the US job data backed the rupee sentiment
The rupee fell to more than one-month low of 65.75 against the US dollar on Thursday.
Bearish dollar overseas also supported the rupee
US dollar was firm against global currencies in overseas markets on rising prospects for a rate hike by US Federal Bank, which hit the rupee sentiment
The recovery in equities in the early session capped the rupee's fall.
Rupee is seen to remain in the range of 67.50-68.80 in the short-term
The domestic currency has gained 9 paise or 0.13 per cent in two days.
Persistent foreign capital inflows also boosted sentiment.
The rupee had shed four paise at 63.81 against the US dollar in Friday's trade on sustained demand.
Healthy demand for the American unit from importers and corporate weighed on the rupee
The rupee had plunged by 19 paise to close at over 3-week low.
India's sad export figure put pressure on the rupee
The rupee appreciated by 0.27 per cent in June against the dollar.
The rupee has dropped by 60 paise or 0.89 per cent in the last three trading days.
Countrywide raids are being conducted in connection with a money laundering case linked to a fertiliser scam.
A derivative is a product whose value is derived from the value of one or more underlying variables or assets in a contractual manner. The underlying asset can be equity, forex, commodity or any other asset.
Investors are trying to push ahead with dollar purchases, emboldened by improving market sentiments
The rupee slipped marginally by two paise at 66.43 against the US dollar on good demand
Silver also rose sharply by Rs 640 to Rs 35,700 per kg.
Fresh dollar selling by banks and exporters largely helped the home currency to recover from early losses
In Delhi, gold of 99.9 and 99.5 per cent purity zoomed up by Rs 650 each to Rs 27,470 and Rs 27,270 per 10 grams respectively.
Dealers attributed the rupee's fall to fresh demand for USD.
Silver advanced by Rs 150 to Rs 34,200 per kg on increased offtake.
The rupee on Thursday plummeted to an over three-month low of 63.32 by losing 50 paise against the US dollar.
The rupee on Friday snapped its two-day gaining streak against the US dollar.
The rupee declined marginally by 3 paise to 66.03 per dollar on fresh demand for the US currency from banks and importers.
SBI managing director PK Gupta told reporters that the rupee has been faring better than many of its peers, including the Turkish, Argentinean, and Indonesian currencies.
A lower opening at the domestic equity market and the dollar's rise against other major currencies overseas also put pressure on the rupee, dealers said.
The dollar index was up by a whopping 0.45 per cent against basket of six major global rivals, which also pushed the rupee to log its biggest daily loss since September 15.
The Indian currency resumed lower at 61.50 per dollar as against the last closing level of 61.46 at the Interbank Foreign Exchange Market.
