The Indian rupee hit an all-time low on Friday, pressured by a firm dollar and as regional currencies stayed on the defensive ahead of the keenly awaited U.S. nonfarm payrolls report. The rupee dropped to a record low of 85.

The rupee declined 14 paise and touched the crucial 86.00mark (provisional) for the first time against the US dollar on Friday as it failed to resist pressure from a stronger American currency and huge outflow of foreign funds.

The rupee's fall below the psychologically important 86 level is likely "sooner rather than later," a trader at a foreign bank said.

The Indian rupee dropped to an all-time low on Wednesday, pressured by a resumption of the dollar's uptrend after data pointed to a resilient U.S. economy, reinforcing bets that the Federal Reserve won't be in a rush to cut policy rates.

Forex traders said the relentless outflow of foreign funds amid soaring US bond yields boosted the American currency, while subdued domestic equity markets pushed the rupee down further.

Banks executed NDF trades worth more than $161 billion at the offshore hub, a sharp rise of 140 per cent from a year ago, data from Clearing Corporation of India showed