The rupee declined by 4 paise to close at 79.56 (provisional) against the US dollar on Thursday due to a stronger dollar in the global markets and losses in the domestic equity markets.
At the interbank foreign exchange market, the domestic currency opened at 79.55 per dollar. It hovered in a range of 79.30 to 79.66 during the session.
The domestic unit finally settled at 79.56, down 4 paise over its previous close.
On Tuesday, the rupee had finished at a nearly two-week high of 79.52. The domestic forex market was closed on Wednesday on account of Ganesh Chaturthi.
"The Indian Rupee outperformed among Asian peers following lower crude oil prices and exporters selling dollars. The news of Russia considering buying as much as USD 70 billion in yuan and other 'friendly' currencies for reserves this year, also supported Asian Currencies," said Dilip Parmar, Research Analyst, HDFC Securities.
In the near-term, spot USDINR is expected to trade in the range of 78.85 to 79.90, Parmar added.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.20 per cent higher at 108.92.
Brent crude futures, the global oil benchmark, fell by 1.54 per cent to $94.17 per barrel.
On the domestic equity market front, the BSE Sensex ended 770.48 points or 1.29 per cent lower at 58,766.59, while the broader NSE Nifty declined 216.50 points or 1.22 per cent to 17,542.80.
Foreign institutional investors turned net buyers in the capital market on Tuesday as they purchased shares worth ₹4,165.86 crore, as per exchange data.