Mumbai: The rupee on Friday fell by 8 paise to close at 68.16 against the US currency on fresh bouts of dollar demand from banks and corporates amid capital outflows.
Forex market endured a nervous and rather mixed session notwithstanding a highly buoyant macro-economic data released on Thursday.
Dealers, too, avoided taking any long positions ahead of the weekend, a forex trader said.
However, the US currency's decline against major world currencies alongside fag-end dollar supply largely helped the rupee recoup some of its initial losses.
The dollar was weak in global markets and lost further ground on profit-taking as Donald Trump's maiden press conference on Wednesday did not give any policy details.
Meanwhile, industrial production grew at a 13-month high of 5.7 per cent in November notwithstanding the demonetisation that was implemented, while retail inflation remained subdued at multi-year low of 3.41 per cent in December, according the government data released on Thursday.
The domestic unit opened on back foot at 68.16 from overnight closing value of 68.08 at the Interbank Foreign Exchange (forex) market.
Reeling under immense pressure, the home currency touched an intra-day low of 68.2650 in late afternoon deals before regaining some ground to end at 68.16, showing a loss of 8 paise, or 0.12 per cent.
It had recovered by a good 24 paise on Thursday against the dollar.
The US dollar index was trading lower 101.19 in late afternoon session.
The RBI fixed the reference rate for the dollar at 68.2310 and for the euro at 72.4750.
In cross-currency trades, the rupee bounced back against the pound sterling to settle at 83.22 from 83.59 and also recovered against the Japanese Yen and finished at 59.49 per 100 yens from 59.58 on Thursday.
But, it dropped further against the euro to end at 72.62 as compared to 72.51 earlier.
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