By Jaspreet Kalra

MUMBAI (Reuters) - The Indian rupee slipped to its weakest closing level on record on Thursday but fared better than its regional peers as state-run banks' dollar sales countered a surging greenback and weakness in local stocks.

The rupee closed at 84.3950 against the U.S. dollar, down marginally from its close at 84.3775 in the previous session. The currency was nearly unchanged week-on-week.

The dollar has surged since Donald Trump's victory in the U.S. presidential election, hurting emerging market assets. Trump's likely tariffs and immigration policies could fuel inflation, potentially slowing and curtailing U.S. rate cuts.

On the day, the dollar index rose 0.4% to its highest in a year at 106.92 while Asian currencies declined between 0.1% to 0.7%.

While dollar strength has weighed on emerging market currencies, the rupee has fared better than most Asian peers over November, helped by interventions by the Reserve Bank of India.

The Indian currency is down 0.4% on the month while the Thai baht and offshore Chinese yuan have weakened by 2.7% and 1.5%, respectively.

India's merchandise trade deficit in October widened more than expected to $27.14 billion, data released on Thursday showed.

Investors await remarks from Federal Reserve Chair Jerome Powell later in the day for cues on the future path of Fed policy rates.

"A positioning-led correction in USD may fail to take DXY back below 106.0, and interest in buying the dollar dips will likely emerge soon," ING Bank said in a note.

Indian financial markets are closed on Friday for a local holiday.

(Reporting by Jaspreet Kalra; Editing by Mrigank Dhaniwala)