The rupee snapped a two-day rising streak to end weaker on Thursday, on choppy local shares and as nervousness about Europe's debt crisis sent the euro plummeting against the dollar.

Rupee

Rupee

But, losses in the rupee were limited due to expectations of robust dollar inflows as the government and the Reserve Bank of India have been taking measures to support growth in Asia's third-largest economy, traders said.

The rupee which touched an intraday high of 52.6175 to the dollar, settled at 52.98/99 to the dollar, 0.06 percent weaker from Wednesday's close of 52.95/96.

Dollar-strength visible in the overseas markets was translated into rupee weakness locally, said Hari Chandramgathan, a forex dealer with Federal Bank in Mumbai.

Chandramgathan, however, believes any fall in the rupee is unlikely to extend beyond a level of 53.00 to 53.10.

The stability of the local currency was the central bank's main concern, a top RBI official said earlier in the day, leading traders to expect the RBI to intervene in case of a sharp slide in the rupee.

Interest rates in India have peaked, Subir Gokarn, a deputy governor of the RBI also said, as data showed the food price index dropped for the first time in nearly six years.

Credit Suisse upgraded Indian equities to neutral from underweight, citing cheap valuations, easing headline inflation and slower earnings estimate downgrades in December.

The main share index which fell nearly a quarter in 2011, rose more than 3 percent in the first two sessions of the new year, before retreating on Wednesday.

The euro fell to a 15-month low and hit European stocks on Thursday, with the first French bond auction of 2012 seen as a test of recent efforts by policymakers to ease the region's crisis.

One-month offshore non-deliverable forward contracts were quoted at 53.30, indicating more weakness in the short-term in the onshore spot rate.

In the currency futures market, the most-traded near-month dollar-rupee contracts on the National Stock Exchange, the MCX-SX and the United Stock Exchange all ended around 53.21, on total volume of $4.21 billion.