The rupee weakened by 12 paise to end at 55.80 against the American currency on fresh dollar demand from banks and importers amid a rise in May inflation sapping investors' hopes of a rate cut by the Reserve Bank next week.
The rupee resumed lower at 55.75 per dollar as against Wednesday's closing level of 55.68 at the Interbank Foreign Exchange market.
With inflation data for May coming at 7.5 per cent, the rupee in line with the stock market lost further ground to touch 55.89, before finishing a tad higher at 55.80.
This was a drop of 12 paise or 0.22 per cent.
Fresh dollar demand from banks and importers in view of uncertainty mainly affected the sentiment, forex dealers said.
Unlike Wednesday when Euro supported rupee to snap a three-day losing streak, on Thursday 17-nation currency moved in a range against the dollar in Asian afternoon
The rupee briefly attempted to stage a recovery by hitting 55.60 per dollar intra-day but the momentum failed to sustain.
"Inflation data had a negative impact on domestic currency on Thursday.
Also, fall of Sensex by around 200 points also weakened the rupee," said N S Venkatesh, Head of Treasury, IDBI Bank.
The rupee is likely to be range-bound in the next few sessions before Greece polls and RBI policy announcements, said Hemal Doshi, Currency Strategist, Geojit Comtrade.
The BSE Sensex dropped by 203 points or 1.20 per cent onheavy selling pressure in view of rise in inflation data and weak global stock markets.
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