The rupee had settled at 69.44 against the dollar on Thursday.

The rupee dived 14 paise to close at 69.58 against the dollar on Friday, pressured by firming crude oil prices amid intensifying geopolitical tensions in the Gulf region. A broad sell-off in the domestic equity markets also kept sentiment at a low ebb, forex traders said.

At the forex market, the domestic currency opened sharply lower at 69.75 against the dollar. However, it recouped some losses to finish at 69.58, registering a fall of 14 paise. The rupee had settled at 69.44 against the dollar on Thursday.

"Overnight surge in crude oil prices have weighed on Indian rupee as it weakened the most among Asian currencies. The geopolitical risks from escalation of US-Iran tension pushed crude oil price higher. In near-term, rupee is having resistance around 69.03 and support at 70.01, the 100 days simple moving average," said V K Sharma, Head - PCG and Capital Market Strategy, HDFC Securities.

Safe-haven assets like the yen rose after reports said US President Donald Trump had approved military strikes against Iran, but later decided against it.

Geopolitical tensions in the Middle East have ratcheted up following attacks on two oil tankers and shooting down of a US surveillance drone.

Brent crude futures, the global oil benchmark, spurted 1.44 per cent to $65.38 per barrel on concerns that the US-Iran standoff may lead to supply disruptions. "India's sovereign bond yields have climbed from a 20-month low of 6.79 per cent to 6.86 per cent, amid concern that higher oil prices will boost inflation and the budget deficit will widen. The yields have dropped more than 50 bps in the past six weeks," Mr Sharma said.

The 10-year government bond yield rose 1.35 per cent to 6.88 per cent on Friday. On a net basis, foreign institutional investors sold equities worth Rs 438.41 crore on Thursday, while domestic institutional investors purchased shares to the tune of Rs 1,241.23 crore, provisional data available with stock exchanges showed.

Snapping its three-session winning run, the BSE Sensex tumbled 407 points Friday as rising tensions between the US and Iran soured risk appetite globally.

The 30-share BSE gauge settled 407.14 points, or 1.03 per cent, lower at 39,194.49. Similarly, the broader NSE Nifty slumped 107.65 points, or 0.91 per cent, to 11,724.10.

The dollar index, which gauges the greenback's strength against a basket of six currencies, slipped 0.03 per cent to 96.59.

"American dollar lost traction on profit taking after tensions between the US and Iran. A gauge of the dollar was still set for its worst week since February 2018," Mr Sharma added.