Fresh dollar selling by exporters on hopes of fall in the USD after downward revision to that country's first quarter GDP growth also helped rupee recover as hopes surfaced that the Fed may delay the plan to taper of monetary stimulus.
Forex dealers said besides dollar gaining against other currencies in the global markets, a lower opening in the domestic equity market also, influenced the rupee.
The rupee fell to a record low of 59.9350 to the dollar, breaching past its all-time low of 58.98 on June 11.
Forex dealers said month-end dollar demand from oil importers and dollar's gain against other currencies overseas, also put pressure on the rupee.
Forex dealers said Euro's weakness against the dollar overseas also put pressure on the rupee.
A sluggish dollar movement in overseas markets and continued capital inflows restricted the rupee fall to a major extent, forex dealers said.
Besides, dollar's weakness against some Asian currencies supported the local unit, forex dealers said.
Traders will watch out for any Reserve Bank of India intervention to prevent the rupee from weakening further.
The rupee resumed lower at 54.73 per dollar as against the last closing level of 54.69 on the Interbank Foreign Exchange Market.
The rupee's upward movement was aided by a good dose of dollar selling by exporters and some banks, amid a weak dollar overseas, said forex dealers.
At the Interbank Foreign Exchange market, the local unit commenced strong at 54.40, which was also to be the day's high, as against previous close of 54.57.
At the Interbank Foreign Exchange market, the rupee resumed stable at its overnight closing level of 54.75 and immediately touched a low of 54.78.
The dollar was firm against some global currencies.
The rupee had lost 21 paise to end at new 10-month low of 56.38 against the dollar on Thursday on fag-end spurt in dollar demand after RBI Governor D Subbarao painted a dim macroeconomic picture.
The rupee had recorded its biggest slump in two months by plunging 57 paise to close at 55.07 in previous session on Friday.
On a weekly basis, the rupee fell by 1.36 per cent or 75 paise as dollar demand outweighed supply and stocks fell.
Even as rupee fell below 56-level against dollar intra-day, Chief Economic Adviser in the Finance Ministry Raghuram Rajan said, there is no need to panic, and RBI takes decisions on whether to intervene in forex markets or not to stabilise the local currency.
This is rupee's lowest closing since 55.45 on November 27, 2012.
Forex dealers said weakness in local equities and a firm dollar overseas against other currencies also weighed on the rupee.
Indian stocks and the rupee have benefitted from dollar liquidity induced by the US Fed stimulus.
The dollar index was up by 0.10 per cent against a basket of six major global rivals, ahead of a slew of data that could offer more evidence on whether an economic recovery is under way in the US.
Rupee had last ended at 54.81-level a dollar on April 5.
The rupee had closed flat at 54.85 against the US dollar in Tuesday's trade amid RBI keeping key rates unchanged in the mid-quarter policy review.
The dollar index was last trading up by 0.04 per cent against a basket of six major global rivals.
While the rupee snapped a four-session downslide, it rupee could not cement intra-day gains as RBI kept short-term lending (repo) and cash reserve ratio unchanged, forex dealers said.
The dollar index was up by 0.04 per cent against a basket of six major global rivals.
At the Interbank Foreign Exchange market, the local unit commenced weak at 54.52 and immediately touched a low of 54.75 on early hesitancy in domestic equities amid sustained dollar demand from importers.
Falling for the second day, the rupee on Thursday weakened by 14 paise to close at 54.46 tracking losses in Indian stocks amid sustained dollar demand from importers.
At Forex market, the domestic unit commenced lower at 53.95 a dollar from previous close of 53.81and moved in a restricted range of 53.88 and 54.06 before settling at 53.94, showing a fall of 13 paise, or 0.24 per cent.
The rupee had gained 18 paise to 55.43 against the dollar in Monday's trade.
The rupee had gained by 57 paise, or 1.04 per cent, in previous two days.
The rupee appreciated for the second straight day to close 14 paise higher at 54.54 on optimism that government would get Parliamentary approval to FDI in multi-brand retail, leading to big inflow of dollars.
In International market, the US dollar fell further in early trade on Monday, losing further steam in the wake of Friday's weaker-than-expected economic-growth number and caution ahead of what is expected to be a busy week of data and monetary-policy decisions.
Forex dealers said a higher opening in the domestic equity market and strengthening of euro against the dollar overseas also supported the rupee.
Month-end dollar demand from importers mainly affected the rupee value against the dollar, a forex dealer said.
The rupee commenced stable at its last closing level of 53.96 at the Interbank Foreign Exchange market.
Forex dealers said strength in euro against the US dollar overseas and increased capital inflows supported the rupee.
Due to weakness in domestic equities and strong dollar demand, rupee shed its month and a half high against follar.
Forex dealers said besides continued demand for the American currency from importers, increased capital outflows by foreign funds kept pressure on the rupee.
Snapping a five-day downward march, the BSE benchmark Sensex on Wednesday shot up by 187.97 points to 18,414.45.
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