Foreign institutional investors pumped in nearly $60 million (Rs 321.26 crore) into local equities, according to BSE provisional data.
Dollar's strength against some currencies overseas and firming crude oil prices also put pressure on the rupee, dealers said.
The rupee had strengthened by eight paise to close at 60.13 a dollar on Thursday, following firm local equities and fresh currency sales by exporters.
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.
Dealers said besides increased dollar selling by exporters, a higher opening in domestic equity market and yen's gain against the American currency overseas helped the rupee to recover.
The dollar index, a gauge of six major currencies, was down by 0.13 per cent as it lost ground against the euro following a better-than-expected survey of German sentiment.
The Rupee on Thursday breached the 49-mark against the US dollar and fell by 52 paise in early trade following increased capital outflow by foreign funds due to melting stock markets.
The rupee had lost 23 paise to end at 54.09 in Tuesday's trade due to month-end dollar demand.
Forex dealers said euro's gains against the American currency in the overseas market also supported the rupee.
The rupee on Monday fell by 40 paise to 59.96 in early trade on the Interbank Foreign Exchange market, weighed down by dollar's gains against other currencies in global markets.
Sustained month-end demand from banks and importers weighed.
Forex dealers said sustained selling of the American currency by exporters and bullish local equity markets buoyed the rupee sentiment.
Besides, a higher opening in the domestic equity market and strengthening of euro and yen against the American currency overseas supported the rupee, forex dealers said.
At the Interbank Foreign Exchange market, rupee opened weak at 55.57 from last Friday's close of 55.50.
Sustained dollar sales by exporters and banks on behalf of their clients also boosted rupee sentiment even as the dollar index was marginally up in overseas markets, said traders.
The rupee had ended 47 paise higher at 60.14 against the US currency in the previous session.
Forex dealers said besides dollar's gains against euro in the overseas markets on worsening euro-zone debt crisis amid growing fears that Spain may need a full bailout, a weak opening in the stock market also put pressure on the local unit.
Forex dealers attributed the rupee's fall to increased dollar demand from importers amidst rising global crude prices
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.
The rupee declined by 10 paise to close at 79.23 (provisional) against the US dollar on Friday, tracking the strength of the American currency in the overseas market. At the interbank foreign exchange market, the local currency opened at 79.20 and finally ended at 79.23, down 10 paise over its previous close of 79.13. "Gains for the currency were short-lived even after RBI announced forex related measures. "Pound held on to its gains after Boris Johnson said he was quitting as prime minister following a rush of ministerial resignations and calls for him to go," said Gaurang Somaiya, Forex & Bullion Analyst, Motilal Oswal Financial Services.
The rupee had rose by a staggering 80 paise, its biggest single-day gain in last nine months, to close at 59.39 amid signs of strong fund inflows on Friday.
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.
Traders will watch out for any Reserve Bank of India intervention to prevent the rupee from weakening further.
At the Interbank Foreign Exchange market, the domestic unit resumed lower at 54.42 a dollar from last weekend's close of 54.28 and declined further to a low of 54.52 on initial hesitancy in share markets and dollar demand from importers, mainly oil refiners, and some banks.
The rupee had lost 23 paise to end at 54.09 in Tuesday's trade due to month-end dollar demand.
A sluggish dollar movement in overseas markets and continued capital inflows restricted the rupee fall to a major extent, forex dealers said.
Strength in dollar against some other currencies overseas weighed on the rupee
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.
Forex dealers say dollar rose against the euro after the European Union cut its economic growth forecast.
The rupee on Wednesday dropped by 73 paise to 61.20 in the late morning deals on persistent month-end dollar demand from importers on the back of strengthening in the US currency overseas.
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.
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 extended its losses and slumped 10 paise to close at a record low of 77.72 (provisional) against the US dollar on Thursday, weighed down by a negative trend in domestic equities and unabated foreign fund outflows. At the interbank foreign exchange market, the rupee opened lower at 77.72 against the greenback, and finally settled for the day at 77.72, down 10 paise over its previous close. During the trading session, the rupee touched an intra-day low of 77.76 and a high of 77.63.
The rupee had gained 5 paise to end at 55.62 against the dollar on selling of the American currency by exporters in Wednesday's session.
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 dollar index was last trading up by 0.04 per cent against a basket of six major global rivals.
Nifty futures traded in Singapore were trading down 0.8 percent in line with other emerging Asian markets.
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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