The rupee extended losses against the greenback as the dollar index continued to decline. The rupee ended 3 paise stronger at 85.52 against US Dollar.
The Indian currency settled at 85.55 a dollar on Thursday. It snapped a three-day winning streak in the previous session.
The rupee opened 28 paise stronger at Rs 85.27 against the US dollar. It erased 15 paise and hit the day's low of 85.70 a dollar during the session.
The dollar index declined for second session in a row as soft retail sales and producer price index data raised hopes for rate cuts by the US Federal Reserve.
The index was trading 0.01% down at 100.64 as of 3:50 p.m.
India's trade deficit widened to $26.42 billion in April, as compared to $21.54 billion. This also pressured the Indian currency.
Oil prices erased gains on concern that supply will likely be more than demand in the market, making a global glut amid US-Iran nuclear talks.
The brent crude was trading flat at $64.58 a barrel as of 3:50 p.m.
"Given a softer dollar and strong equity inflows, the rupee may stay range-bound near term. However, a widening trade deficit and geopolitical risks pose downside pressure. USDINR is expected to trade between 84.80–85.80," said Amit Pabari, managing director, CR Forex Advisors.
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