Shell scripts are run inside a subshell, and each subshell has its own concept of what the current directory is. The cd succeeds, but as soon as the subshell exits, you’re back in the interactive shell and nothing ever changed there.
Do you have any opportunity to pass in a shell/path variable to the osascript one-liner?
E.g., here’s your script if you were duplicate current_directory/foo.txt to current_directory/bar/foo.txt. pwd prints the current directory and then it’s interpolated.
filePath=$(pwd) && osascript
-e "tell application \"Finder\""
-e "set targetFile to (POSIX file \"$filePath/foo.txt\" as alias)"
-e "set destinationFolder to POSIX file \"$filePath/bar\" as alias"
-e "duplicate targetFile to destinationFolder"
-e "end tell"