The rupee continued to decline against the American currency for the third consecutive day by slipping another 4 paise to close at 1-week low of 66.69 per dollar after touching more than two-year low of 67.01 during the intra-day deals.

Sustained capital outflows, fall in equities amid subdued domestic macro-data along with sudden spurt in crude also affected the rupee value against the dollar, a forex dealer said.

The rupee resumed lower at 66.95 per dollar as against the Thursday's closing level of 66.65 at the Interbank Foreign Exchange market and dropped further to more than two-year low of 67.01 on initial dollar demand from banks and importers on the back of higher greenback overseas.

However, it recovered from initial losses to 66.68 on mild selling of dollars by exporters, before ending at 66.69, showing a loss of 4 paise or 0.06 per cent.

The local currency has lost 20 paise or 0.30 per cent in three days.

The rupee had last touched 68.62 on September 4, 2013 during the intra-day trade and ended at 67.07 per dollar on the same day.

The domestic currency moved in a range of 66.68 and 67.01 per dollar during the day on Friday.

The dollar index rose by 0.42 per cent against a basket of six currencies in the late afternoon trade.

Pramit Brahmbhatt, Veracity Group CEO, said, "Today the USD opened on a positive note on back of positive US Economic Data (Unemployment Claims), but could not sustain at higher levels. The rupee depreciated by 4 paisa and close at 66.69 levels for the day."

Trading range for the spot USD/INR pair is expected to be within 66.25 to 67 levels.

In the overseas market, the euro partly erased its strong prior-session gain as attention shifted from the disappointing European Central Bank meeting to the upcoming US labour market report.

The bloc's single currency hit a one-month high after the ECB on Thursday announced stimulus measures that fell short of market expectations.

Meanwhile, the Indian benchmark Sensex dropped further by 248.41 points or 0.96 per cent.

In forward market on Friday, premium for dollar eased further on sustained receivings from exporters.

The benchmark six-month premium payable in May eased to 200.5-202.5 paise from 203-205 paise on Thursday while far forward November 2016 contract also moved down further to 407.5-409.5 paise from 411-413 paise.

The RBI fixed the reference rate for the dollar at 66.8365 and for the euro at 73.0456.

The rupee dropped against the pound sterling to end at 100.76 from 99.50 on Thursday and also fell against the euro to settle at 72.55 as against 70.38.

The domestic currency fell against the Japanese currency to close at 54.27 from 53.98 per 100 yen on Thursday.