In volatile trade, the rupee on Friday lost two paise to end the day at 61.19 against the dollar amid tension in Ukraine ahead of a weekend referendum prompting investors to exit from riskier markets.
Late dollar demand from importers also weighed on the rupee, a forex dealer said, adding that the local currency would have suffered a steeper loss but for a weak dollar overseas.
The dollar index fell by 0.10 per cent against the basket of six major global rivals.
At the Interbank Foreign Exchange (Forex) market, the domestic unit commenced sharply weak at 61.44 a dollar from last close of 61.17.
It declined further to a low of 61.55 on initial losses in local stocks.
The rupee rebounded at the fag-end in tandem with local share values to a high of 61.06 before ending at 61.19, still revealing a fall of two paise.
The Indian benchmark, which was down by over 200 points in intra-day trade, recovered on late buying and closed up by 35.19 points.
FIIs picked up shares worth $ 104.30 million yesterday, as per SEBI data.
Pramit Brahmbhatt, CEO, Alpari Financial Services, (India) said: “Rupee traded volatile on Friday as in the morning it depreciated as tensions in Ukraine forced investors to shift their focus from riskier to the safer asset.
“But in the second half it recovered after wholesale price-based inflation eased to a nine-month low in February as food and fuel prices moderated, raising expectations that the RBI would leave interest rates unchanged at its policy review next month.