Better dollar overseas also weighed on the rupee while consistent foreign funds inflow in stocks restricted the fall to some extent, said forex dealers.
At the Interbank Foreign Exchange (Forex) market, the local unit commenced strong at 54.40, which was also to be the day's high, as against previous close of 54.57. This initial buoyancy was on the back of strong equities at initial stages on better-than-expected third quarter results by Infosys.
The rupee, however, later fell back in line with domestic stocks following steep fall in industrial production data and rise in trade deficit to touch a low of 54.84. It ended at 54.76, showing a fall of 19 paise or 0.25 per cent.
In last 3 days, it had gained 66 paise or 1.20 per cent.
"Rupee was seen depreciating against dollar today after weaker November IIP figures came out at -0.1 per cent. Since last two-three sessions, rupee was gaining on account of flows in the markets and dollar index weakening internationally," said Abhishek Goenka, Founder & CEO, India Forex Advisors.
The dollar index, a gauge of six major global currencies, was up by 0.03 per cent in late trades.
India's exports contracted by 1.9 per cent in December to USD 24.88 billion, down for the eighth month in a row due to demand slowdown in the US and Europe.
Trade deficit, which represents an outflow of domestic currency, stood at USD 17.6 billion.
Meanwhile, the Indian benchmark Sensex, which was up by 176 points at initial stages, closed almost unchanged today.
Foreign Institutional Investors (FIIs) pumped in Rs 249.50 crore yesterday, as per provisional data with bourses. (MORE)
