The rupee depreciated 12 paise to 79.25 against the US dollar in early trade on Friday tracking the strength of the American currency and persistent foreign fund outflows.
At the interbank foreign exchange, the rupee opened at 79.20 against the American dollar, then lost ground to quote at 79.25, registering a fall of 12 paise from the last close.
On Thursday, the rupee closed at 79.13 against the dollar.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.05 per cent lower at 107.07.
"As the dollar index rises towards 107 and with crude up above USD 100 per barrel, it does not seem that we will get lower levels on the USD/INR pair," said Anil Kumar Bhansali, Head of Treasury, Finrex Treasury Advisors.
"In any case, the flows will not follow immediately after the announcement of measures and positive market sentiments. RBI could take more non-conventional steps to stabilize the rupee," Bhansali added.
Global oil benchmark Brent crude futures rose 0.17 per cent to USD 104.83 per barrel.
On the domestic equity market front, the 30-share Sensex was trading 263.94 points or 0.49 per cent higher at 54,442.40, while the broader NSE Nifty advanced 83.60 points or 0.52 per cent to 16,216.50.
RBI on Wednesday raised overseas borrowing limits for companies and liberalised norms for foreign investments in government bonds as it announced a slew of measures to boost foreign exchange inflows in efforts to curb the fall of the rupee.
The central bank had also said that it has been closely and continuously monitoring the liquidity conditions in the forex market and has stepped in as needed in all its segments to alleviate dollar tightness with the objective of ensuring orderly market functioning.
The US Federal Reserve's minutes of the meeting held last month indicated a hawkish stance as a rate hike of 75 basis points is likely in July. The minutes were released on Wednesday.
Foreign institutional investors were net sellers in the capital market on Thursday as they offloaded shares worth Rs 925.22 crore, as per stock exchange data.
