The rupee depreciated 9 paise to 94.50 against the US dollar in early trade on Friday as the broad strength of the American currency in the overseas market dented investor sentiment.
Forex traders said overnight gains in crude oil prices and a recovery in the US dollar weighed on the domestic unit.
At the interbank foreign exchange market the rupee opened at 94.50 against the US dollar, registering a fall of 9 paise from its previous close.
However, during initial trade, it recovered slightly to touch a high of 94.36 against the US dollar.
On Thursday, the rupee had settled at 94.41 against the American currency.
The Bank of England kept policy rates unchanged while US weekly unemployment claims were better than forecasts, said Anuj Choudhary, Research Analyst, Mirae Asset Sharekhan.
"We expect the Rupee to trade with a positive bias on strength in domestic markets and fresh FII inflows," Choudhary said, adding that tensions between Ukraine and Russia and attacks in the Middle East may cap sharp upside.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading at 101.71, higher by 0.17 per cent.
Brent crude, the global oil benchmark, was trading higher by 2.04 per cent at USD 100.30 per barrel in futures trade.
On the domestic equity market front, Sensex rose 33 points to 79,343.06 in early trade, while Nifty declined 52.95 points to 24,477.40.
Foreign Institutional Investors (FIIs) were net buyers on Thursday, purchasing equities worth Rs 14,974.68 crore, according to exchange data.
