The rupee declined by 7 paise to close at 82.86 (provisional) against the US dollar on Friday due to firm crude oil prices and steep losses in domestic stocks amid growing concerns about interest rate hikes.

A weak greenback in the global markets restricted the local unit's losses, forex dealers said.

At the interbank foreign exchange market, the rupee opened marginally down at 82.81 against its previous close of 82.79. It moved in a range of 82.77 to 82.88 in the day's trade.

The rupee finally finished at 82.86 against the US dollar, showing a loss of 7 paise over its last close.

Analysts said investors are concerned that strong US economic data will lead the Federal Reserve to double down on its interest rate hikes to control inflation.

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Revised figures showed the US economy grew a lot more in July-September than initial projections, while jobless claims were less than expected last week. The Fed has already increased the interest rates to 15-year high levels.

The dollar index, which gauges the greenback's strength against a basket of six currencies, dropped 0.14 per cent to 104.49.

Brent crude oil, the pricing basis for international trading, advanced 2 per cent to $82.61 per barrel on expectations of lower Russian crude exports from the Baltic region in December.

Domestic stocks dropped over 2 per centin line with losses in Asian markets. Benchmark Sensex tumbled 980.93 points to end at 59,845.29 while the broader Nifty plunged 320.55 points to 17,806.80.

Foreign institutional investors (FIIs) turned net buyers in the capital markets on Thursday as they bought shares worth ₹928.63 crore, according to exchange data.