Persistent foreign capital inflows also boosted sentiment.
The rupee appreciated further on Thursday, adding 106 paise to 66.01 against the dollar, after steps taken by new Reserve Bank of India Governor Raghuram Rajan to attract US currency inflows boosted market sentiment.
In line with rally in stocks, the Indian rupee on Monday appreciated for the second straight session and closed with a eight paise gain at a one-week high of 61.36 against the Greenback.
The domestic currency has dropped 40 paise or 0.60 per cent in two days
Banks and exporters preferred to reduce their dollar position in view of its weakness.
The domestic currency has dropped by 62 paise or 0.93 per cent in four trading days.
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The rupee is set to breach the Rs 60-a-dollar mark again this week as the Street expects foreign institutional investors to continue pulling out of domestic markets. According to the street, this would result in government bond yields rising.
Weakness in dollar in the overseas market also boosted the rupee value
The rupee recovered by 11 paise to trade at 60.84 against the US dollar in early trade today on selling of the American currency by banks and exporters.
The US dollar's weakness against some currencies overseas capped the losses.
Fresh foreign capital outflows also affected the rupee sentiment, a forex dealer said.
The rupee resumed lower at 63.65 per dollar as against previous closing of 63.58 at the Interbank Foreign Exchange (Forex) market.
The Rupee is seen strengthening against the dollar.
The dollar strengthened against major world currencies.
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.
The domestic currency has gained by four paise or 0.06 per cent in two days.
The rupee had slumped to its all-time closing low of 68.80 a dollar on August 28, 2013.
Increased month-end demand for the US currency from importers put pressure on the rupee
The Indian rupee was off to a bad start in the new year as it suffered the worst single-day drop in over two weeks today by falling 32 paise to end at 63.35 against the US dollar.
Indian rupee appreciated by 35 paise to end at two-week high of 63.03 against the greenback.
There was fresh selling of the American currency by banks and exporters
The rupee depreciated further by 7 paise to 65.12.
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.
Tracking a recovery in local shares, the Indian rupee on Friday snapped a two-day declining trend and bounced back by 39 paise to end at 61.44 against the Greenback on fresh dollar selling by exporters and some banks.
The RBI fixed the reference rate for the dollar at 65.2525 and for the euro at 72.1954.
Forex market was shut on Tuesday on account of 'Mahavir Jayanti'.
The dollar gained against other currencies overseas.
The rupee had gained by 50 paise or 0.75 per cent in two weeks.
The domestic unit had recovered to 68.65 in early trade on Friday as against Thursday's closing of 68.72.
The rupee on Monday slipped by 5 paise to close at 63.57 per dollar on fresh demand for the American currency from banks.
There's sustained demand for the American currency from importers and banks
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.
The rupee strengthened by 13 paise to 61.67 against the US dollar at close.
Reacting to market specific developments, the domestic unit touched a low of 66.74 in intra-day trade before concluding at 66.65.
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.
Month end dollar demand from oil importers has forced rupee to trade weak.
The rupee had last ended at 67.22 per dollar on March 16, 2016.
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 rupee dropped on renewed demand for the American currency.
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