Extending its losses for the second day, the rupee on Friday dropped by another 8 paise to close at 66.48 per dollar on persistent demand from banks and importers for the US currency.
Weak stock markets and a strong dollar overseas also affected the rupee sentiment, dealers said.
The rupee resumed lower at 66.50 per dollar against last close of 66.40 at the Interbank Foreign Exchange (Forex) market. It hovered in a range of 66.4675 and 66.6075 per dollar before ending at 66.48 per dollar, showing a loss of 8 paise or 0.12%.
The rupee lost 26 paise or 0.39% in two days to Friday.
The dollar index was up by 0.12% against a basket of six currencies in the late afternoon trade.
Meanwhile, the RBI fixed the reference rate for the dollar at 66.4925 and euro at 75.1033.
In cross-currency trades, the rupee dropped further against the pound sterling to close at 95.65 from 95.42 on Thursday.
However, it firmed up further against the euro to 74.91 per euro from 75.16 per euro previously.
The domestic currency also moved up further against the yen to 60.08 per 100 yens from 60.48.