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The Indian rupee declined against the U.S. currency on Friday, extending its weekly decline, mainly on account of dollar demand from oil and other importers, traders said.

The rupee slipped to 82.87 per U.S. dollar from 82.76 in the previous session, taking its weekly decline to 0.7%. It would have lost more in today's session had it not been for the regular dollar supply from public sector banks.

The rupee this week fell on all days except on Wednesday when it was helped by the softer-than-expected U.S. inflation reading.

The continued oil-related dollar demand and offers (on the USD/INR) from public sector banks kept the rupee in a narrow trading range today, Anil Bhansali, head treasury at Finrex Treasury Advisors, said.

The local currency this week was bogged down by hawkish rate hikes from the U.S. Federal Reserve and the European Central Bank. Both raised rates by 50 basis points (bps), along expected lines, but the accompanying statement and comments were seen hawkish relative to expectations.

That fuelled more concerns about the growth outlook, souring risk appetite. Futures pointed to more losses for U.S. equities after the S&P 500 Index plunged 2.5% on Thursday. Indian shares posted a weekly decline.

The rupee forward premiums rose this week, carrying the upside momentum from last week when the Reserve Bank of India likely conducted sell/buy swaps, according to traders. The 1-year USD/INR implied yield rose 16 bps this week to near 2%.

Next week, the rupee will be eyeing the extent of risk aversion prompted by the growth concerns and how the dollar index responds to it.