The rupee closed weaker against the US currency for the second day in a row as the dollar index rebounded, tracking sustained decline in the pound sterling and euro in the second half of the trade. Demand for the greenback weighed on the Indian unit.
The rupee weakened by six paise to close at 86.61 against the US dollar. The domestic currency opened flat at 84.56 against the greenback, according to Bloomberg data. It had settled at 86.55 a dollar Thursday.
The dollar index rebounded from the five-day declining streak in the European session as the pound sterling extended losses after weak UK retail sales data. Fall in the Euro also contributed to the dollar index's gains.
The measures aim to alleviate liquidity tightness, especially with looming GST outflows. This proactive stance highlights the RBI's focus on managing short-term liquidity which will likely put pressure on rupee, said Amit Pabari, managing director of CR Forex Advisor.
The measures to manage liquidity are likely to increase short-term volatility as the market adjusts.
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