Dollar demand from importers also weighed on the rupee, while sustained capital inflows and weak dollar overseas limited the fall to certain extent, a forex dealer said.
At Forex market, the domestic unit commenced lower at 53.95 a dollar from previous close of 53.81and moved in a restricted range of 53.88 and 54.06 before settling at 53.94, showing a fall of 13 paise, or 0.24 per cent.
The Indian benchmark Sensex, after three-day of gaining string, dropped by 160.13 points, or 0.81 per cent, after hawkish stance by the RBI governor on the future rate cut.
The Reserve Bank of India in its annual monetary policy 2013-14 meet today cut short-term lending rates (repo) by 0.25 per cent, while kept cash reserve ratio unchanged, which disappointed the industry and markets as the rate cut of 0.25
Rupee snaps 2-day gains vs dollar
Rupee at nearly 3-month high, up 53.80
Rupee bounces back by 12 paise vs dollar
Rupee down 15 paise on month-end dollar demand