The rupee came off a two-month high and ended four paise lower at 61.27 against the US dollar on Friday, as fresh demand for the US currency from importers outweighed capital inflows and firm local equities.
At the Interbank Foreign Exchange Market, the local currency started on a strong note and touched a high of 60.92 against the dollar. The rupee closed at 61.27, a fall of four paise. It had gained 60 paise, or 0.97 per cent, on Thursday.
"The strength in the rupee was mainly attributed to weakness in the US dollar and sharp gains in the euro," said Abhishek Goenka, CEO of India Forex Advisors.
The rupee shifted between gains and losses after a news report said the Reserve Bank of India (RBI) is considering closing the forex swap window for oil companies, which
the RBI later clarified was still open, Goenka said.
The central bank in a release said the oil marketing companies swap window remains operational and that any tapering of the facility will be done in a calibrated manner.
Meanwhile, the
30-share benchmark Sensex surged 467.38 points, or 2.29 per cent, to end at a three-year high of 20,882.89. Overseas investors bought a net Rs 1,752.98 crore of shares on Friday.
The dollar index was down 0.06 per cent against a basket of six major global currencies after US lawmakers reached a deal to temporarily avoid a debt default and end a 16-day partial government shutdown.
PHOTO: Reuters 
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