The rupee fell back sharply against the pound sterling at 83.28 from Monday's close of 82.49 and also reacted downwards against the euro to 71.59 from 71.29.
Increased demand for the US currency from importers put pressure on the rupee.
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.
Forex dealers said fresh demand for the dollar also put pressure on the rupee.
Dealers said the country's trade balance numbers were inline with expectations as India's exports rose an annual 0.8 per cent in January and imports for the month rose 6 per cent, leaving a trade deficit of $20 billion.
The rupee on Tuesday fell by 12 paise to 53.97 against the dollar in early trade, extending losses for the fifth straight session at the Interbank Foreign Exchange (Forex) market due to sustained demand for the US currency from importers.
Exporters sold dollars amid RBI's concerns on current account deficit.
Erasing early gains, the rupee on Thursday closed six paise lower at 53.22 due to sustained dollar demand after government estimates pegged ongoing fiscal's GDP growth at a decade low of five per cent.
Selling of dollars by exporters helped the Indian currency appreciate.
The rupee resumed higher at 53.26 per dollar.
Dollar selling by exporters and banks also supported the rupee, forex dealers said.
Forex dealers said slight weakness in dollar overseas capped the rupee's losses to some extent.
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.
Forex dealers said euro's gain against the US dollar supported the rupee, but month-end dollar demand from oil importers and a weak opening in the equity market restricted the gains.
This is the second biggest rise since September 21 last year, when rupee had gained by 93 paise, or 1.71 per cent.
Forex dealers said bouts of heavy dollar demand from banks and oil importers amid lower equities attributed the rupee sentiment.
Fresh bouts of dollar demand from banks and importers mainly attributed to rupee sentiment, though sustained foreign capital inflows restricting its further fall, a dealer said.
Forex dealers said sustained selling of the American currency by exporters and bullish local equity markets buoyed the rupee sentiment.
The rupee had gained 17 paise to close at one-week high of 54.77 against the dollar on fresh selling of the US currency by exporters and capital inflows in the previous session on Friday.
Forex dealers said continued capital inflows and euro's gains against the dollar overseas on hopes that the European Central Bank may take action soon to ease the continent's debt crisis, kept the rupee's sentiment firm.
The rupee had gained 11 paise to end at one-week high of 54.84 against the US dollar in Wednesday's trade on sustained selling of the US dollar by exporters and capital inflows.
The rupee on Friday again breached the 56-mark by losing 31 paise to 56.15 against the US dollar in early trade to hit a fresh one-week low, due to strong demand for the American currency from banks and importers.
Forex dealers said a weak dollar overseas also boosted the rupee sentiment, cutting short a two-day losing trend.
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.
Bouts of dollar demand from importers put pressure on the rupee
A weak dollar overseas ahead of a US Fed policy meeting also aided the rupee recovery while late weakness in domestic equities restricted the rupee's rise, forex dealers said.
Forex dealers said a weak dollar overseas and firm local equities also supported the local currency.
Forex dealers said some capital inflows and a weak dollar overseas helped the local currency make an attempt to arrest its fall.
Forex dealers said rupee was under pressure throughout the session as dollar gained against rivals on hopes that European Central Bank will cut its main interest rate to a record low in a bid to support the region's economic growth.
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.
Dealers said firm local equities amid sustained capital inflows limited the rupee's fall.
The rupee had recovered by 10 paise to close at 55.06 against the dollar on Monday on dollar selling by exporters amid weakness in the American currency in international markets.
Brokers said a weak trend in euro in overseas markets also dampened the rupee sentiment against the US dollar.
The rupee on Tuesday lost 11 paise to Rs 55.85 against the US dollar in early trade on the Interbank Foreign Exchange following dollar gains against other currencies overseas amid a weak trend in the equity market.
Sustained dollar sales by exporters and banks and a higher opening in the equity market also boosted the rupee sentiment, forex dealers said.
The rupee had lost 52 paise to close at 54.08 against the dollar on Tuesday on heavy month-end dollar demand from importers and corporates.
The rupee on Monday appreciated by 9 paise to 53.75 against the US dollar in early trade at the Interbank Foreign Exchange on selling of the American currency by exporters and banks.
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.
The rupee had tumbled by 54 paise to end at three-week low of 53.41 against the dollar in Thursday's session on heavy dollar demand from importers amid a rise in the US currency overseas on the back of robust economic data.
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