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The Indian rupee weakened to an all-time low on Friday, hurt by persistently strong dollar demand in the non-deliverable forwards (NDF) market while likely intervention by the Reserve Bank of India (RBI) capped the currency's losses.

The rupee declined to 85.35 to the dollar, eclipsing its previous all-time low of 85.2825 hit on Thursday.

The local currency has hit record low levels in every trading session this week, pressured by broad strength in the dollar alongside a bearish bias on the local currency amid the widening of India's trade deficit and concerns about slowing growth.

State-run banks were spotted offering dollars, most likely on behalf of the RBI, traders said.

The dollar index was a tad higher at 108.1 while Asian currencies were down between 0.1% to 1%.