The rupee closed at an all-time low against the greenback, quoting as low as 50.65/67 to a dollar, further down from its record close of 50.48 per dollar on Thursday.
The domestic currency was hammered by continued outflow of capital and higher month-end dollar demand, besides a strong US dollar in the overseas market.
A strong dollar gave foreign banks an opportunity to buy the US currency in local market to sell it in offshore non-deliverable forward contracts to book immediate profits.
The domestic unit opened lower at 50.69 a dollar and remained stable in late morning deals.
The rupee had touched an intra-day low of 50.60 on 2 December 2008.
The domestic currency has tumbled by 85 paise (or 1.71 per cent) in the last four trading sessions alone.
Foreign institutional investors have pulled out nearly $1.6 billion from the equity markets in the current calendar year so far.
FIIs sold more of Indian equities after Standard & Poor's cut India's credit rating outlook to negative from stable on 24 February.
Over the past few months, the Reserve Bank of India has been intervening in the currency market to smooth rupee movements, causing a decline in the nation's foreign-exchange reserves. Foreign exchange reserves with the RBI dropped to $249.7 billion this month, from a record $316.2 billion in May 2008.