The Indian rupee opened on a cautious note and fell 30 paise to 71.27 against the US dollar in early trade on Friday after Moody's changed its India rating outlook to negative citing lower economic growth.
Moody's Investors Service has changed the outlook on India's ratings to 'negative' from 'stable', saying there was increasing risks that economic growth will remain materially lower than the past.
Weak opening in domestic equities also weighed on the domestic currency, however, sustained foreign fund inflows and easing crude oil prices capped the losses, forex traders said.
At the interbank foreign exchange, the rupee opened at 71.26 then fell to 71.27 against the US dollar, showing a decline of 30 paise over its previous closing.
The Indian rupee on Thursday had closed at 70.97 against the US dollar.
Meanwhile, brent crude futures, the global oil benchmark, fell 0.18 per cent to USD 62.18 per barrel.
Foreign institutional investors (FIIs) remained net buyers in the capital markets, putting in Rs 926.60 crore on Thursday, as per provisional data.
Domestic bourses opened on a negative note on Friday with benchmark indices Sensex trading 79.05 points down at 40,574.69 and Nifty lower by 25.25 points at 11,986.80.
The dollar index, which gauges the greenback's strength against a basket of six currencies, fell by 0.02 per cent to 98.12.
The 10-year government bond yield was at 6.54 per cent in morning trade.