The rupee depreciated by 36 paise to close at 79.61 (provisional) against the US dollar on Thursday amid rising crude oil prices.
At the interbank foreign exchange market, the local currency opened at 79.22 and saw an intra-day high of 79.22 and a low of 79.69 against the American currency.
It finally ended at 79.61, down 36 paise over its previous close of 79.25.
Forex traders said the rupee is likely to trade on a mixed note in the near term. Recovery in domestic markets from lower levels and FII inflows may support the local unit.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, fell 0.23 per cent to 104.95, after official data showed that US inflation slowed down from a 40-year high in June to 8.5 per cent in July on lower gasoline prices.
Traders said investors now will focus on key domestic macroeconomic data points like index of industrial production (IIP), consumer price index (CPI) and trade balance numbers due on Friday for further cues.
Brent crude futures, the global oil benchmark, advanced 0.84 per cent to $98.22 per barrel.
On the domestic equity market front, the BSE Sensex ended 515.31 points or 0.88 per cent higher at 59,332.60 points, while the broader NSE Nifty advanced 124.25 points or 0.71 per cent to 17,659.00 points.
Foreign institutional investors remained net buyers in the capital market on Wednesday as they purchased shares worth Rs 1,061.88 crore, as per exchange data.