The rupee declined by 7 paise to close at 79.78 (provisional) against the U.S. dollar on Friday, tracking a strong dollar in overseas markets and losses in domestic equities.
At the interbank foreign exchange market, the domestic currency opened at 79.80 per dollar. It hovered in a range of 79.71 to 79.85 during the session.
The domestic unit finally settled at 79.78, down 7 paise over its previous close of 79.71.
"We expect the Rupee to trade with a negative bias on the strong Dollar and risk aversion in global markets. Global markets declined after IMF spokesman Gerry Rice flagged concerns over further slowdown in the global economy and said that some countries are expected to slip into recession in 2023," said Anuj Choudhary, Research Analyst at Sharekhan by BNP Paribas.
Concerns over aggressive rate hikes by the Federal Reserve may also put downside pressure on the local unit.
However, easing crude oil prices may support the rupee at lower levels. Markets may also take cues from FII fund flows data.
"USD-INR spot price is expected to trade in a range of ₹79 to ₹80.50 in the next couple of sessions," Mr. Choudhary added.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.29% higher at 110.05.
Brent crude futures, the global oil benchmark, advanced by 0.24% to $91.06 per barrel.
On the domestic equity market front, the BSE Sensex ended 1,093.22 points or 1.82% lower at 58,840.79, while the broader NSE Nifty declined 346.55 points or 1.94% to 17,530.85.
Foreign institutional investors were net sellers in the capital market on Thursday as they offloaded shares worth ₹1,270.68 crore, as per exchange data.