The Indian rupee depreciated against the U.S. dollar in afternoon deals on Friday, as regional shares dropped amid weak global cues in the wake of renewed concerns over a faster tightening of monetary policy by the Federal Reserve to combat inflation.

Investors focus on the U.S. Labor Department's nonfarm payrolls data due later today for more clues on the strength of the labor market and its impact on monetary policy.

The benchmark S&P BSE Sensex dropped 887 points, or 1.59 percent, to 54,814, while the broader NSE Nifty index was down 296 points, or 1.78 percent, at 16,385.

The Indian rupee fell to near a 2-month low of 76.97 against the greenback from Thursday's close of 76.52. The next possible downside target for the rupee is seen around the 77.00 level.

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