The Indian currency on Friday declined 17 paise to mark its closure at 46.85 as against the US currency owing to new purchases of the greenback by foreign banking institutions and positive trend in the stock markets.

Dealers at the Interbank Foreign Exchange (FOREX) said that the rupee belled the day on a strong note at 46.65 a dollar as compared to its last closure at 46.69 on lack of demand for dollars by local operators.

During noon trade, the Indian unit was trading slightly stronger on account of some gains in domestic shares, while some losses in the dollar against major currencies also aided sentiment.

The index of the dollar against six major currencies remained down 0.2% and would be watched for direction.

One-month offshore non-deliverable forward contracts were quoted at 46.71, weaker than the onshore spot rate.

In the currency futures market, the most traded near-month dollar-rupee contracts on the NSE and MCX-SX were both at 46.7225, with the total traded volume on the two exchanges at a low of USD 3 billion.

In the meantime, dollar's six month forward premium stood at 2.78/80 (2.75/77) per cent and one-year premium remained down at 2.34/36 (2.32/34) per cent.

The Rupee closed the day against Euro at 56.52/54 (57.17/19) per unit, Pound sterling at 68.28/30 (68.40/42) per unit and Yen at 50.60/62 (50.30/32) per 100 units. (With Inputs from Agencies)