Capital inflows continued to aid the rupee's rise, although a strong dollar overseas capped the gains.
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Some analysts believe that markets are expected to remain unclear and would have to wait until tomorrow's US non-farm payrolls data.
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The rupee gained 8 paise to close at over two-week high of 61.23 against the US dollar in the previous session.
The rupee added another 8 paise to end at 61.23 against the dollar, the highest level in more than two weeks, as the US currency traded stable ahead of the outcome of Federal Reserve's meeting today and as domestic shares surged to a record.
However, FII outflows of Rs 545 crore (Rs 5.45 billion) capped the gains in the rupee, which had slumped by 126 paise in past two days.
Continuing its range-bound movement for the fourth session, the rupee today closed up by two paise at 59.25 ahead of industrial output and retail inflation data.
The local currency had lost 119 paise in the past five sessions on rising worries over current account gap and fears that withdrawal of US stimulus will hit inflows from overseas.
While RBI's foreign exchange reserves have swelled to over $400 billion, it has a 'sell' position of $981 billion.
The case relates roughly to assessment years 2000-01 to 2002-03 and 2004-05 to 2007-08
Forex dealers said weakness in local equities cast a shadow on the rupee. Dollar losing in overseas markets didn't impact the fall of the local currency, they added.
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The rupee bounced back from a one-month low to post its first gain in the New Year, rising 10 paise to close at 62.16 against the dollar after the RBI was said to have sold the US currency.
The demand for the US currency from importers outweighed capital inflows and firm local equities.
After another day of volatile trade, the rupee today appreciated by seven paise to close at a new one-month high of 59.04 against the dollar as the RBI's liquidity-tightening measures continued to lend support.
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Snapping a two-day fall, the rupee opened strong at 59.49 a dollar from the previous close of 59.76 at the Interbank Foreign Exchange Market and then touched a low of 59.59.
The rupee weakened by 27 paise to trade at six-week low of 60.45 against the US dollar in early trade today at the Interbank Foreign Exchange market on high demand for the American currency from importers.
The rupee on Wednesday snapped its two days of losses and edged up two paise to end at 59.27 against the dollar following late selling of the US currency by exporters.
Banks and exporters preferred to reduce their dollar position in view of its weakness.
The rupee gained for the second day, adding 32 paise to close at a fresh two-month high of 61.07 against the dollar amid a rise in local equities and sustained capital inflows.
Ending a four-day upmove, the rupee on Tuesday retreated four paise from its 11-month high levels to close at 58.63 against the dollar on fresh demand for the US currency from importers, amid some profit-booking in stocks.
Month end dollar demand from oil importers has forced rupee to trade weak.
The battered rupee gained 225 paise to 66.55 against the dollar today, the most in at least 15 years, after the Reserve Bank of India eased pressure in the currency market by starting a facility for state-run oil refiners to buy foreign exchange.
The immediate concern for the rupee is the sharp spike in oil prices
The huge pressure on the currency market largely went unnoticed because of the demonetisation exercise.
The rupee closed at Rs 66.21 in its last trading session.
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The local currency opened at 62.20 a dollar from the previous close of 61.93 and immediately touched a low of 62.29 at the interbank foreign exchange market.
India's record current account deficit has been a key reason behind why Standard & Poor's and Fitch Ratings cut their outlooks on the country's sovereign rating to 'negative' last year.
After a day's respite, the rupee on Wednesday fell by 29 paise, its biggest single day fall in a week, to end at 56.73 today due to heavy dollar demand from importers amid renewed concerns over withdrawal of US monetary stimulus.
The RBI recently met with a handful of foreign banks and asked them to stop acting as market-makers for rupee NDFs, according to three bankers involved in the discussions.
GAAR will not override the recently revised double taxation avoidance agreements with Mauritius and Singapore.
Increased demand from oil importers for the American currency and a weak opening in the domestic stock market also put pressure on the rupee.
Clamping down on the delays in repatriating foreign exchange earnings, the Reserve Bank of India (RBI) has tightened norms for special economic zones (SEZs), asking them to realise and bring back full value of goods and services to India within a year from the date of export.
RBI is unlikely to stem the slide against the dollar as the greenback is rising rapidly against all currencies in the world.
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