The central bank governor said on Friday the rupee currency was in an appreciation trend and the monetary authority would manage any volatility through intervention.
However, dealers said the local currency was under downward pressure as imports continue to rise in a stable exchange rate regime and low interest rate environment.
The spot currency ended at 130.95/131.10 per dollar compared with Thursday's close of 130.95/131.05.
Dealers said banks traded the spot at 130.95 as the central bank defended at that level through moral suasion.
Three-day forwards, or spot-next, also capped at 131.10, closed at 131.10/12 per dollar compared with Thursday's close of 131.00/12.
Dealers said the central bank's capping of the spot-next forced banks to trade in four-day forwards, ended flat at 131.10/12.
The market expects the local currency to remain weak due to rising seasonal imports, at least through November and only start to inch up in December on remittances, dealers said.
Overseas investors sold a net 39.54 billion rupees ($302 million) worth of government securities in the eight weeks through Nov. 12, data from the central bank showed.