Dealers said firm local equities amid sustained capital inflows limited the rupee's fall.
The rupee had recovered by 10 paise to close at 55.06 against the dollar on Monday on dollar selling by exporters amid weakness in the American currency in international markets.
The rupee commenced higher at 55.07 a dollar at the Interbank Foreign Exchange market from last Friday's close of 55.16.
Dollar index was seen trading in a thin range ahead of unemployment claims and Fed Chairman Bernanke speech later on Thursday.
The rupee on Tuesday lost 11 paise to Rs 55.85 against the US dollar in early trade on the Interbank Foreign Exchange following dollar gains against other currencies overseas amid a weak trend in the equity market.
Brokers said a weak trend in euro in overseas markets also dampened the rupee sentiment against the US dollar.
The rupee also recovered against the pound sterling to 87.01 from overnight close of 87.20 and also recouped losses against the euro to 69.66 from 69.84.
Sustained dollar sales by exporters and banks and a higher opening in the equity market also boosted the rupee sentiment, forex dealers said.
Fresh month-end dollar demand from importers, mainly oil companies, affected the rupee's value against the dollar, a forex dealer said.
The rupee had lost 52 paise to close at 54.08 against the dollar on Tuesday on heavy month-end dollar demand from importers and corporates.
The dollar index was down by 0.23 per cent against a basket of six major rivals after the US Federal Reserve continued to express concern about the economy and made no changes to its ultra-easy monetary policies.
Bouts of dollar demand from importers put pressure on the rupee
The local currency, which had plunged to an all-time low of 55.39 on Tuesday, crashed to 55.82 at the Interbank Foreign Exchange market in early trade.
The rupee rose by 11 paise to 53.36 against the US dollar in early trade at the Interbank Foreign Exchange today on continued selling of the American currency by exporters and banks.
The rupee on Monday appreciated by 9 paise to 53.75 against the US dollar in early trade at the Interbank Foreign Exchange on selling of the American currency by exporters and banks.
Forex dealer said increased demand for the American currency from oil importers and dollar's gains against other currencies overseas mainly put pressure on the local unit.
The rupee also recouped against the pound sterling to end at 85.01 from overnight close of 85.15 and also rebounded against the Japanese yen to 67.04 per 100 yen from 67.38.
The Indian stock market benchmark Sensex, which was down till afternoon session, recovered later and closed up by 38.37 points or 0.21 per cent after Europe opened higher.
Forex dealers said besides dollar's gains against euro in the overseas markets, a weak opening in the stock market put pressure on the domestic currency.
The rupee on Thursday recovered by a hefty 60 paise to 53.24 against the US dollar in early trade on the Interbank Foreign Exchange market after the Reserve Bank tightened norms for utilisation of the foreign currency fixed deposit funds to check outflow of forex.
It touched a low of 53.16 on continued dollar demand from importers and some weakness in stocks in the initial stage.
The rupee declined for fourth day in a row by losing 16 paise to Rs 52.88 per dollar in early trade today, weighed down by dollar's gains overseas.
The rupee declined for fourth day in a row by losing 16 paise to Rs 52.88 per dollar in early trade today, weighed down by dollar's gains overseas.
The ICE dollar index, which measures the dollar against a basket of six currencies, traded at 79.522 from 79.595 in the previous session.
Forex experts said the dollar index, a gauge of six major global rivals, was marginally up ahead of US non-farm payroll data later in the evening while New York crude oil was quoting below USD 91 a barrel in Europe today.
The rupee had edged up by 45 paise to close at an over five-month high of 52.40 against the dollar in the previous session on Monday on sustained capital inflows.
The rupee was at 61.09, breaching the previous low of 60.76 hit on June 26. It had closed at 60.225/235 on Friday.
The rupee had gained 11 paise to close at a fresh over 18-week high of 53.36 against the dollar in the previous session.
The rupee lost 2 paise to end at 53.47 against the dollar in Monday's session on heavy month-end dollar demand from importers and weakness in equities.
The rupee resumed higher at 54.15 per dollar as against last closing level of 54.38 at the Interbank Foreign Exchange Market and firmed up further to 54.00 at 1040 hours.
Crude oil prices rose in Asian trade on Friday after a brief dip as dealers digested upbeat US economic data and comments from a Federal Reserve official that its stimulus programme will not end soon, analysts said.
In New York, the dollar slipped against the euro and other major currencies yesterday after the US economic data boosted equities.
At the Interbank Foreign Exchange (Forex) market, the rupee resumed lower at 54.18 a dollar from previous close of 54.01.
Forex dealers said besides dollar selling by exporters, a higher opening in domestic equity market helped the rupee to strengthen.
At the Interbank Foreign Exchange (Forex) market, the rupee resumed sharply higher at 53.80 a dollar compared to last Friday's close of 54.30.
A sharp fall in dollar overseas, triggered by US Fed's overnight announcement of a fresh round of quantitative easing, and sustained capital inflows into stock markets helped rupee stay in green all through the session.
With dollar demand rising, it dropped further to 55.49, before ending slightly better at 55.43 -- a loss of 22 paise or 0.39 per cent over Wednesday.
The rupee had lost 8 paise to end at 55.44 against the dollar in Monday's session on fresh dollar demand from importers.
The rupee had strengthened by 30 paise to close at two-week high of 55.36 against the dollar in Friday's trade on the back of capital inflows.
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