Choppy domestic shares on Monday pulled the rupee off its one-week high touched earlier on robust dollar inflows and gains across most Asian currencies.
The partially convertible rupee ended at 45.07/08 per dollar, after hitting 45.04 -- its strongest since May 20, and 0.2% higher from 45.16/17 on Friday.
Some information technology firms were among the top dollar sellers on Monday, traders said.
Volumes in rupee trade were slightly subdued due to a US market holiday.
"Month-end flows will dictate the rupee's direction on Tuesday," said Ashutosh Khajuria, head of treasury at IDBI Bank in Mumbai.
Foreign funds bought shares worth USD 56 million last Friday, latest data from the market regulator showed, but are net sellers of USD 1.46 billion in May.
"We could see the rupee in 45.00-45.20 band. But it is doubtful if it will break the 45.00 level in the current situation," Khajuria said.
The movement in the common European unit also weighed on the rupee.
The euro eased on Monday, running into key chart resistance as uncertainty over how Greece's debt crisis will be tackled kept investors on edge, while the dollar stabilised following a slide late last week.
The euro was at USD 1.4287 and the index of the dollar against six major currencies at 74.891 points at the end of trade in local currency market.
The Malaysian ringgit and the Singapore dollar broke through resistance levels against the dollar in subdued trading on Monday but later gave up some gains as the euro dipped with investors covering dollar-short positions.
"Going forward, the rupee trajectory would take cues emerging from the policy stance of the ECB (European Central Bank) and the Fed (US Federal Reserve) amid developments in the euro sovereign space," said YES Bank in a research note written last week.
"We expect USDINR to trade in the range 45.00-45.50 over the next one month and move towards 46.50 by December."
Traders said the GDP data due on Tuesday around 0530 GMT was also eyed for more cues on the economy's growth path and in turn the rupee's direction.
India's GDP is expected to have expanded 8.2% in the quarter through March, unchanged from the previous quarter, a Reuters poll showed last week.
Indian shares fell 0.2% in sea-saw trade on Monday, led by auto maker Mahindra & Mahindra, with surging inflation and interest rates and the escalating Greek debt crisis prompting investors to pare exposure to risky assets.
The one-month onshore forward premium was at 24.50 points versus 22.50 last close. The three-month was at 69.75 points against 71 and the one-year was at 257.25 points versus 269.50.
The one-month offshore non-deliverable forward contracts were quoted at 45.31, weaker than 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 were at 45.3050, 45.2975, 45.3025 respectively. Total volume was USD 4.92 billion.
