The rupee was trading at 54.31/32 versus its 54.01/02 previous close as of 1039 GMT on Thursday, holding onto the losses in a range-bound session.
A foreign bank dealer said that he expects 54.50 to hold for the session, with only position-squaring by banks expected.
The rupee will respond to further political developments, especially with the Congress Party looking at mustering support from regional parties after key ally Mamata Banerjee withdrew its support.
The euro fell to a 1-week low against the dollar after disappointing German private sector data.
