The rupee is down 3 percent for the year as of December 26, and is set to end the year with losses.
The rupee is on course to become Asia's third worst performing currency this year: only the Japanese yen and the Indonesian rupiah have posted bigger losses, according to the currencies tracked by Reuters.
The rupee has had a volatile 2012, slumping to a record low of 57.32/dollar in late June, on concerns about India's current account and fiscal deficits.
Although the currency has recovered since mid-September when the government pushed ambitious reforms in retail and aviation, the performance contrasts sharply with the 25 percent gain in the Sensex this year.
The rupee is down even after the country attracted $24 billion in foreign inflows into stocks, the second highest in the past five years.