The rupee on Wednesday lost 2 paise to close at two-and-a-half month low of 55.12 against the dollar amid strong demand for the US currency.
Dealers said firm local equities amid sustained capital inflows limited the rupee's fall.
A firm dollar overseas dampened the rupee sentiment, they added.
At the Interbank Foreign Exchange (Forex) market, rupee commenced lower at 55.13 a dollar and immediately touched a high of 55.06.
It fell to a low of 55.37 in the late morning session because of dollar demand from importers, mainly oil refiners and rise in dollar
However, mid-session dollar selling by exporters and a strong rally in equities helped rupee to recover major part of its lost ground to settle at 55.12, still down 2 paise from its last close.
The rupee had last settled at 53.43 on September 13, 2012.
The dollar index was up by 0.28 per cent against a basket of six major currencies as attention shifted back toward whether and when Greece will get its next instalment of bailout funds.
"The weakness in the rupee was attributed to dollar demand as a safe haven following failure of European leaders to agree on Greece bailout," India Forex Advisors Founder and CEO Abhishek Goenka said.