The rupee appreciated by 29 paise to close at 63.38 against the greenback following fresh dollar selling by exporters.
At lower levels, a supportive buying in dollar forced rupee to depreciate since opening trade
The Indian unit opened higher at 66.10 per dollar as against overnight level of 66.30 at the Interbank Foreign Exchange market and firmed up further to 66.04 on initial dollar selling.
However, the hefty initial gains of the rupee, which had jumped to 61.05 intra-day, were substantially erased on month-end demand for US dollars from private oil firms and some defence-related purchases, amid fall in domestic stocks.
The rupee had recovered by 8 paise to close at 66.91 in Tuesday's trade.
The rupee has gained by 21 paise or 0.31 per cent in last two days
Lower dollar in the overseas market also boosted the rupee value
The Indian unit opened sharply higher at 64.80 as against Wednesday's closing level of 65.12.
The Fed's decision on tapering its monthly $85 billion bond-buying programme is expected later on Wednesday.
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In the global market, the US dollar rose against the basket currencies in early trade as US President Barack Obama called for diplomacy in dealing with alleged chemical weapons attack in Syria but kept open the possibility of military action against the Assad regime.
The rupee resumed higher at 64.40 a dollar from Friday's close of 65.24 and touched a low of 64.54 at the interbank foreign exchange market.
A strengthening dollar overseas also kept the rupee under pressure amid demand from importers. Goldman Sachs followed JP Morgan, HSBC and Nomura in cutting India's economic growth forecast and also said it expects the rupee to touch 72 against the dollar in the next six months.
Hopes of more foreign funds on the back of sharp recovery in domestic equity market also boosted the value rupee against the dollar
The local currency opened higher at 61.20 a dollar from the previous close of 61.30 at the Interbank Foreign Exchange Market.
A weak dollar overseas failed to restrict the rupee's decline, a forex dealer said.
The rupee depreciated by 19 paise to trade at almost seven-month low of 61.94 against the US currency in early trade today at the Interbank Foreign Exchange on capital outflows amidst the dollar's gain against other currencies overseas.
Top gainers include Yes Bank, HUL, Vedanta, NTPC, Bharti Airtel, Adani Ports, PowerGrid and Tata Motors, rising up to 5 per cent.
A lower opening at the domestic equity market and the dollar's rise against other major currencies overseas also put pressure on the rupee, dealers said.
Fresh demand for the US currency from importers and banks alongside sustained capital outflows by foreign funds weighed on the local unit
Domestic equity markets opened with losses which capped the rupee gains.
The dollar index, which measures the greenback's strength against a trade-weighted basket of six major currencies, was up by 0.19 per cent at 95.48.
A weak dollar sentiment across the board alongside unwinding of long positions by speculative traders ahead of key US macro data release largely supported the rupee
The rupee is expected to remain under pressure in the near term, given the strengthening of the dollar against major global currencies and widening of the trade deficit.
The rupee had shed four paise at 63.81 against the US dollar in Friday's trade on sustained demand.
Foreign institutional investors pulled out Rs 86.66 crore (Rs 866.6 million) from local stocks on Monday, as per provisional BSE data.
The dollar index was trading higher by 0.06 per cent against its major global rivals today.
At the Interbank Foreign Exchange market, the domestic currency resumed stable at its overnight close of 60.07 a dollar and immediately touched a low of 60.09.
The rupee had lost 10 paise to close at 21-month low of 64.26 against the greenback in Tuesday's trade.
The RBI fixed the reference rate for the dollar at 64.1505 and for the euro at 72.2720.
In dull trade, the rupee on Monday ended a mere two paise lower at 60.20 against the US dollar on weak local equities and imported-driven demand for the American currency.
The rupee resumed marginally lower at 67.24 per dollar against Wednesday's closing level of 67.21.
The rupee hit a near 10-month high as an alliance led by pro-reform and business friendly Hindu nationalist Narendra was on course for an absolute majority.
India's sad export figure put pressure on the rupee
The rupee on Tuesday weakened by 15 paise to close at 63.30 against the US currency
The dollar index was down 0.01 per cent at 95.86 against a basket of six currencies in early trade
Investors are trying to push ahead with dollar purchases, emboldened by improving market sentiments
The rupee on Tuesday gained 29 paise to close at seven-month high of 60.48 against the dollar on sustained selling of the US currency by exporters and banks.
Dealers attributed the rupee's fall to fresh demand for the US currency from importers
Tracking local stocks, rupee on Tuesday regained 19 paise to end at 61.85 against dollar as reports of easing geopolitical tension between Russia and Ukraine helped emerging market currencies script a smart recovery.
Foreign fund inflows and a higher opening in the domestic equity market supported the domestic unit
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