The rupee plunged by 42 paise to settle at a one-and-a-half-month low of 71.80 against the US currency on Friday due to a spike in crude oil prices after US President Donald Trump ordered strike on an Iranian commander.
On Thursday, the domestic unit had dropped by 16 paise to end at 71.38 against the US dollar.
At the interbank foreign exchange market, the rupee opened at 71.56, then lost further ground to touch a low of 71.81 against the American currency.
The unit finally settled at 71.80 against the US dollar, logging its biggest single-day loss of 42 paise in more than one-and-a-half months. The rupee had previously closed near this level on November 20.
On a weekly basis, the domestic unit lost 45 paise.
Mr. Trump ordered the killing of Iran Revolutionary Guards commander Qasem Soleimani, escalating tensions in the strategic Gulf region.
Following US-Iran tensions, Brent futures, the global oil benchmark, soared 4.24% to $69.06 per barrel.