The rupee remained range-bound at near 14-week lows hit earlier in the session, as traders brace for more pain in the local currency given the subdued outlook on growth and doubts about the extent of future rate cuts.
Traders are on the lookout for possible intervention since most believe the central bank might take a stand when the rupee hits around the 52-level against the dollar.
The currency was last at 51.84/85 after slipping to 51.9450, its lowest since January. 10. It had closed down at 51.78/79 on Wednesday.
Dollar-selling by exporters and comments from India's trade secretary forecasting the current account deficit could fall to 3 to 3.5 per cent of GDP in fiscal 2012/13, down from an expected 4 per cent in the year ended in March, were seen as mild positives.
A Reuters poll showed analysts expect an additional 50 basis points easing in the repo rate during the fiscal year ended March 2013, after the Reserve Bank of India already delivered a cut of 50 bps in a single move on Tuesday.
"It (rupee) may not appreciate substantially from current levels due to the CAD, BOP (balance of payments) situation, coupled with reduced maneuverability for the central bank due to high fiscal deficit," said NS Venkatesh, treasurer at IDBI Bank had said this week.
"A big joker in the pack is also oil prices. If these flare up due to any reason then all bets are off," Venkatesh said. India is vulnerable to fluctuations in global oil prices since it imports more than 80% of its crude oil needs.
