The rupee in Friday's trade hit levels of three week low by declining as much as 36 paise to trade at 67.98 for a dollar. But later, was seen trading higher by a margin at 67.93.
The domestic unit is weakening on account of strong dollar demand as the interest rate hike by the Fed Reserve is propelling more foreign outflows from the country.
The sentiment in the Indian rupee is also seen to be hit after the European Central Bank or ECB as a cautious stance decided to keep interest rates steady until mid 2019. As a reaction, the dollar is gaining against other overseas currencies, which is resulting in the fall of rupee.
As per the agencies' report, the forex market is seeing huge volatility due to worries on the CAD front, inflationary pressure and heavy foreign outflow. The RBI data highlights that CAD for the FY 18 has increased by more than three times to $48.7 billion or 1.9 per cent of the GDP in comparison to $14.4 billion or 0.6 per cent in the previous year.
The rupee is likely to remain highly volatile ahead of the assembly elections due early next year and some analyst even expect it to touch the level of 69 against a dollar.