The Indian rupee erased earlier gains even after the finance minister announced a slew of measures to narrow the current account deficit, as dealers cited the proposals lacked specifics.
Finance Minister P. Chidambaram announced the measures in parliament, which included allowing state finance companies to sell quasi-sovereign bonds to fund long-term infrastructure.
Traders had anticipated the government would unveil more details, including how much would be raised via debt abroad.
The partially convertible fell to as low as 61.08 per dollar and was trading at 61.05/07 per dollar at 0951 GMT, compared to its close of 60.88/89 on Thursday.
Benchmark 10-year bond yields rose to 8.24 percent from its 8.12 percent close on Thursday.
Markets were closed on Friday for a public holiday.