The Indian rupee eased on Friday as dollar demand from state-run oil companies forced banks to cut short positions built on expectations of foreign fund inflows towards the country's largest initial public offering (IPO).
Concerns about rising prices of crude oil, India's biggest import item, also weighed on sentiment, dealers said.
The rupee ended at 46.3050/3150 per dollar, off the morning's high of 46.1750 and weaker than the previous close of 46.1900/2050. Despite Friday's loss, the rupee ended 0.12 percent firmer during the week.
"There was dollar buying from oil companies and some other private sector firms," said a chief dealer at a private sector bank.
"This forced a lot of banks who went short on the dollar to cut positions. Also with crude oil ruling firm, no one wants to take a chance going into the weekend."
Earlier, banks had gone short on the dollar on expectations of foreign fund investments towards India's biggest initial public offering.