Despite a rally in the value of euro on Friday, the rupee weakened. One of the major reasons, say analysts is the increase in demand for US dollar because of rise in defense related payments. It worked as a major denting factor for rupee.

The partial convertible rupee stood at 46.75/76 per dollar. It is 0.3 per cent higher than the closing figure on Thursday when it stood at 46.60/61. per dollar.

Dealers who are closely watching the work of Indian currency said that while there was no clear view as to why the value of rupee declined, it can be the off-shoot of the defense expenditure which need dollar. They now anticipate the rupee to be lying in the range of 46.60-46.75.

A sharper fall could have happened but for the gains in the Indian stock market. The Indian shares rose by 0.2 pet cent on Friday and that stopped a further decrease in the value of rupee.

This once again reiterates the importance of foreign investments in Indian stocks. Till now, in 2010 foreigners have purchased close to $8.4 billion worth of shares.