Continued dollar offloading by exporters and some banks on hopes further fall in dollar value overseas mainly supported the rupee.
Some weakness in the local stock market amid a rising trend pared rupee's early gains, forex dealers said.
The rupee rose by 7 paise to Rs 55.68 against the US dollar in early trade today on the Interbank Foreign Exchange as the American currency weakened against euro overseas.
FIIs bought stocks worth just Rs 83.16 crore as per provisional data.
Forex dealers said dollar selling by exporters and a higher opening in the equity market also supported the rupee.
It had strengthened by 45 paise on Tuesday to close at one-month high of 55.07 against the dollar, tracking a jump in local shares.
Forex dealers said a higher opening in the domestic stock market and euro's gain against the American currency as concerns over eurozone and the US eased, supported the rupee.
The rupee on Thursday lost 25 paise to 55.72 against the US dollar in early trade at the InterbankForeign Exchange market as the American currency gained strength against other currencies overseas.
In the last four days, rupee has lost 104 paise against the dollar.
The domestic currency has fallen past the 56-level against the dollar after June 29.
Tracking weak stock markets, the rupee today plunged by 65 paise to 55.97, its lowest closing in over three weeks, against dollar amid fresh Eurozone worries and month-end US currency demand from oil firms.
In New York, the dollar index climbed to its highest level in about two years on Wednesday.
Weak trends in local stocks with Sensex dropping by 129 points also weighed on rupee but some capital inflows limited its decline to some extent, forex dealers said.
Forex dealers said a higher opening in the stock market also helped the local unit to recover after four sessions of losses.
The dollar strengthened against other currencies as well in the overseas market.
FIIs today pumped in Rs 591 crore in stocks, provisional data from stock exchanges showed.
The rupee on Tuesday rose by 11 paise to 56.90 against the US dollar in early trade at the Interbank Foreign Exchange market as the American currency weakened against euro and other currencies overseas.
The rupee on Monday rose by 5 paise to trade at 55.35 against the US dollar in early trade at the Interbank Foreign Exchange as the American currency weakened against euro overseas.
The domestic currency had ended 12 paise lower at Rs 55.80 against the dollar in Thursday's trade on fresh dollar demand from banks and importers amid a rise in May inflation.
However, the US dollar's strength against other currencies overseas capped the rupee's gain
Sentiments were weighed down as the US dollar turned higher against its major counterparts.
At the Interbank Foreign Exchange (Forex) market, the domestic unit opened lower at 56.02 as against its previous close of 55.64 on dollar buying by importers, mainly oil refiners, to meet their month-end requirements.
This marks a turnaround after rupee's 158-paise plunge in the last three sessions.
The Indian rupee recovered by four paise to 54.99 after touching all-time low of 55.07 against the American currency in the late morning trade due to mild selling of dollars by banks following following measures taken by RBI to curb the local currency's fall.
Forex dealers said fresh dollar demand from banks and particularly, month-end demand from oil importers despite weakness of the dollar in the overseas market pulled down the rupee.
The local currency commenced lower at 54.03 a dollar on Monday's close of 53.86 at the Interbank Foreign Exchange market.
The US Fed kept its near-zero benchmark interest rate unchanged.
Forex dealers said, however, a firm dollar capped rupee's rise to some extent.
Forex traders said a stronger dollar also dragged the rupee down.
The rupee had hit a record low of 68.85 in August 2013.
Forex dealers attributed the rupee's fall to increased demand for the US currency from importers
The rupee rose by seven paise to 62.10 against the dollar.
Persistent dollar demand from banks and importers on the back of a higher dollar in the New York market mainly affected the rupee.
For the month as a whole, rupee depreciated 6.34 per cent in May.
A higher opening in the domestic stock market buoyed the rupee sentiment
The rupee had ended 11 paise higher at 62.20 on Tuesday.
The rupee ended lower by six paise at 65.73 against the US dollar on Monday.
The Indian rupee on Wednesday ended unchanged against the US dollar at 61.41 ahead of the outcome of US Federal Reserve's policy meeting.
The Indian rupee on Friday rose for the fifth straight session against the Greenback and ended at 62.46.
Rupee ends flat against dollar ahead of Fed policy outcome.
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