Rupee drops to five-month low, closes higher

After touching a five-month low in the morning trade, the rupee erased all its losses and closed higher as foreign funds continued to sell their stocks and fresh concerns emerged over the situation in Iraq.

After plunging to 61.70 to a dollar, its lowest level since March 5 and a drop of as much as 38 paise over its previous close, the rupee closed Friday at 61.14/15 per dollar compared to 61.22/23 on Thursday.

The currency registered its worst weekly performance last week, since touching record low levels in August 2013.

Since the beginning of this year, the rupee has gained 0.71 percent , while foreign institutional investors (FIIs) have bought $11.80 billion from local equity markets.

As per official data, foreign investors have been net sellers of $811.55 million in domestic debt this month.

The Reserve Bank of India (RBI) was spotted selling dollars for a second consecutive session Friday.

According to the RBI Friday, India's foreign exchange reserves fell to $319.99 billion as on Aug 1, compared to $320.56 billion in the week before.