Forex traders said the USD/INR spot has been trading in a tight range amid lack of cues.
The rupee opened higher at 71.26 and touched a high of 71.19 in morning trade. Later, it lost ground and fell to a low of 71.40 before closing at 71.35, the lowest level since December 4.
On a weekly basis, the rupee depreciated by 19 paise.
Crude oil prices rose to three-month high levels on positive US and Chinese economic data.
Brent futures gained 0.22 per cent to trade at USD 68.07 per barrel while the West Texas Intermediate was up 24 cents, or 0.4%, at USD 61.92 a barrel.
"The USD/INR spot has been trading in a tight range of 71-71.40 amid holiday season, and we expect thin and lackluster movement to continue even next week," said Rahul Gupta, Head of Research- Currency , Emkay Global Financial Services.
Gupta further said that "the positive sentiments regarding US-China Phase-One trade deal will go on until there is any contradictory news from the US. 71 will continue to act as a strong support, while 71.40 will be a strong resistance."
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, fell by 0.36 per cent to 97.18.
On the domestic market front, the 30-share BSE Sensex ended 411.38 points, or 1 per cent, higher at 41,575.14. It hit an intra-day high of 41,611.27. Similarly, the broader NSE Nifty closed 119.25 points, or 0.98 per cent, up at 12,245.80.
Foreign institutional investors (FIIs) remained net sellers in equities, as they sold shares worth Rs 504.13 crore on a net basis on Thursday, according to provisional exchange data.
The 10-year government bond yield was at 6.51 per cent.
The Financial Benchmark India Private Ltd (FBIL) set the reference rate for the rupee/dollar at 71.2699 and for rupee/euro at 79.0264. The reference rate for rupee/British pound was fixed at 92.5549 and for rupee/100 Japanese yen at 65.05. DRR MR MR