MUMBAI: The Indian rupee fell to a two-month low on Friday, posting its worst week in five months, as local shares slumped mirroring a global selloff, with the central bank’s policy review next week to set the tone for the currency.

The rupee’s fall was driven by steep losses in shares, as investors fled markets in Asia and Latin America, fearing the impact of a slower growth in China as highlighted by a weak factory activity report on Thursday, and expectations that the US Federal Reserve will cut further its bond-buying stimulus at a policy meeting next week.

The local currency weakened ahead of the Reserve Bank of India’s rate review on Tuesday, where it is expected to keep rates steady on easing inflation.

However, a recent central bank report suggesting that the RBI targets retail inflation has led to concerns that interest rates may remain high for an extended period of time.

The rupee closed at 62.66/67 per dollar compared with its close of 61.9275/9375 on Thursday.

It fell to a low of 62.73 during the session, a level last seen on Nov. 22. On the day, it fell 1.2 percent, its biggest fall since Nov. 11.

For the week, it was down 1.8 percent, its biggest fall since Aug. 30.

In the offshore non-deliverable forwards PNDF, the one-month contract was at 62.88 while the three-month was at 63.72.