The domestic unit on Monday recovered by 34 paise to close at 71.56 against the US dollar.
According to commerce ministry data, India's trade deficit came down to $15.1 bn in Nov from $17.13 bn in Oct this year
Last week's provisional data from exchanges showed that foreign institutional investors (FIIs) became net sellers, as they off-loaded a total of Rs 20.67 billion worth of shares.
Forex dealers said increased dollar demand from importers amid firming global crude oil prices and a strong dollar weighed on the rupee sentiment.
The domestic currency on Friday strengthened by 27 paise to close at a four-month high of 69.58 against the greenback.
Traders said sustained foreign fund inflows, easing crude oil prices and a smart recovery in domestic equity markets also aided the domestic currency
The domestic unit on Thursday breached the 70-mark for the first time since August 27 to end at a three-month high of 69.85 per US dollar.
On Tuesday, the domestic unit recovered by 8 paise to close at 70.79 on increased selling of the greenback by exporters and softening crude oil prices.
The rupee had rallied 77 paise to end at 70.69 against the US dollar on Thursday
RBI's weekly data showed that the value of the country's gold reserves increased by 73 million to $20.96 billion
The rupee has strengthened of late and gained more than 3% over the past seven sessions
Traders said increased selling of the greenback by exporters and banks also supported the rupee
Increased selling of the US currency by exporters and banks and gains in equity markets aided the rupee to post gains for the fourth day
The last time rupee breached the 72-level was on September 14, when it had closed at 71.84
Overseas holdings have risen Rs 80.1 billion ($1.1 billion) in the previous three weeks, data from the Clearing Corporation of India Ltd. show
Further, upcoming elections in India and escalating trade war tensions between the US and China too blemished the outlook of equities in emerging markets like India
Improvement in GST collections and favourable earnings posted by some companies saw investors adding to risky bets
Brent crude, the international benchmark, dropped 3.48 per cent to trade at a seven-month low of $72.65 per barrel
Rated Indian companies are better positioned because they tend to have manageable short-term obligations and good liquidity
A stable crude oil prices, however, restricted the rupee fall to some extent, forex traders said