Rupee falls sharply, hits 57.11 to the dollar

After holding for much of Friday's session, the Indian rupee retreated sharply against the dollar. It broke the 57 mark against the dollar, hit on Thursday, and traded at 57.04 to the greenback.

The rupee had earlier hit a high of 56.60 versus its close of 56.84/85 on Thursday.

High current account deficit, which stood at 6.7 per cent of GDP in the December quarter, is weighing on the rupee, analysts said.

"Having such a large current account deficit, it will be very difficult for us to cope with global capital flows. The event risk on rupee has gone up even though lower inflation should have reduced the pace of depreciation of rupee," Sajjid Chinoy, India economist of JP Morgan told NDTV. (Read: Five reasons why the rupee is sliding against the dollar)

The weakness in the local currency comes ahead of the U.S. non-farm payrolls data on Friday. Strong U.S. data will revive fears of the Federal Reserve withdrawing its monetary stimulus which could push the pair above 57 levels, traders said.

All emerging market currencies will taper and the rupee will act no differently if the Fed withdraws its bond buying programme, Mr Chinoy added.

The currency is close to its all-time low of 57.32.