The rupee fell to its lowest in nearly a month on Friday, hurt by weaker local shares and a slump in the euro following weak economic growth data.
The weakness in the stock markets ahead of the budget has raised concerns about future capital inflows, which has been crucial to the rupee's fortunes, making it one of Asia's top winners in 2013 so far.
That has been reflected in the rupee's performance which fell 1.3 percent this week, its biggest weekly loss in three months.
Currency dealers are also awaiting the outcome of the G20 meeting over the weekend.
"The rupee will remain weak in the run-up to the budget. The initial euphoria over the euro zone seems to be fading and local factors like the current account deficit will weigh," said Abhishek Goenka, chief executive at Indiaforex Advisors.
He expects the rupee to trade in a 53.50-55 band in the run-up to the budget.
The partially convertible rupee closed at 54.22/23 per dollar versus its previous close of 53.92/93, a second successive session of falls. It fell to 54.24 in the session, its lowest since January 17.