The rupee falls to 53.97/98 from its previous close of 53.8450/8550 on data showing December factory output unexpectedly contracted, even as consumer price-based inflation stayed well above 10 percent. The pair had been trading at 53.88 before the data.
The two sets of data are keeping the prospect for RBI rate cuts in March uncertain. Traders said January WPI data, due on Thursday, would be key in setting expectations.
Traders expect good resistance at 54.05 levels, which if broken, could take the pair to 54.25-30.
The 53.90-54.05 level for USD/INR has marked the highs over the 7 trading days between January 21-29 and marks the 38.2 percent retracement of the 55.89 (November 26) and 52.87 (February 5) decline.