Rupee also gained from strong $6.1-billion foreign investment into debt and equities this month.
Economists say that the near-term hit to economy due to demonetisation will impact the borrowers ability to service loans, thus impacting the asset quality of banks
The fall was attributed to the worries around the thegovernment's demonetisation of 500 and 1000 rupee notesearlier this month to crack down on black money.
Easing food and fuel prices helped pull down retail inflation to 14-month low of 4.20 per cent in October this year, strengthening the case for RBI rate cut next month.
Wholesale inflation surged to at a faster-than-expected pace in July, gaining 3.55 per cent from a year earlier on higher food prices.
The state of public finances showed some deterioration with the fiscal deficit crossing 61 per cent of the Budget Estimates in the first quarter of 2016-17, on higher expenditure and subdued realisation of non-tax revenues.
Services export rose by 13.4 per cent to $13.46 billion in May this year, the Reserve Bank data showed on Friday.
Merchandise exports rose for the first time in June, after falling for 18 consecutive months, spurred by increasing commodity shipments, data released by the Ministry of Commerce and Industry showed on Friday.
Wholesale prices jumped to 1.62 per cent in June compared to 0.79 increase in the previous month.
Retail inflation inched up to a 22-month high level of 5.77 per cent in June on increase in food prices including that of key kitchen staples like vegetables and cereals.
Consumer inflation edged slightly higher to 5.77 per cent in June, against 5.76 per cent increase in the previous month. Economists in an NDTV Profit poll had estimated inflation to rise at 5.75 per cent.
India's headline inflation probably stayed near a two-year high in June even as industrial production in May likely contracted, increasing the odds that the central bank will keep interest rates on hold next month.
Retail inflation for industrial workers rose to 6.59 per cent in May from 5.86 per cent in the previous month on account of increase in price of food items.
India's infrastructure output grew an annual 2.8 percent in May, its slowest pace in five months, primarily dragged down by a slowdown in output of electricity, steel and refinery products, government data showed on Thursday.
Prime Minister Narendra Modi hailed a sweeping liberalisation of rules on foreign direct investment on Monday, saying they would make Asia's third-largest economy the most open in the world.
India's current account deficit in the January-March quarter narrowed to $300 million, or 0.1 percent of gross domestic product, from $7.1 billion, or 1.3 percent of GDP in the previous quarter, the central bank said on Thursday.
India's trade deficit widened in May to $6.27 billion, its highest in three months, government data showed on Wednesday.
India's annual consumer price inflation accelerated to a near two-year high in May, driven by surging prices of food products such as pulses and sugar, which could dampen hopes of a rate cut at least during next monetary policy review in August.
Consumer price data due to be released later on Monday is likely to show inflation edged up for a second straight month in May, driven by higher prices for food and fuel items, though good rainfall in next three months could dampen food prices.
Factory output growth shrunk 0.8 per cent year on year in April after rising 0.1 per cent in March, data released by the Central Statistics Office (CSO) showed today.