The dollar index was down by around 0.15 per cent against a basket of six major global currencies.
Investors are anxious over the US-China trade tension, a sharp devaluation in yuan and uncertainty over Kashmir issue.
The local currency had surged 35 paise to 63.65 in Thursday's trade.
The rupee is seen weakening against dollar in current week.
The rupee on Monday appreciated by 11 paise to 54.64 against the US dollar in early trade at the Interbank Foreign Exchange, aided by selling of the American currency by exporters and banks.
The rupee had lost 21 paise to end at new 10-month low of 56.38 against the dollar on Thursday on fag-end spurt in dollar demand after RBI Governor D Subbarao painted a dim macroeconomic picture.
However, foreign capital inflows into equity market restricted the rupee's fall to some extent.
On a weekly basis, the rupee fell by 1.36 per cent or 75 paise as dollar demand outweighed supply and stocks fell.
Even as rupee fell below 56-level against dollar intra-day, Chief Economic Adviser in the Finance Ministry Raghuram Rajan said, there is no need to panic, and RBI takes decisions on whether to intervene in forex markets or not to stabilise the local currency.
This is rupee's lowest closing since 55.45 on November 27, 2012.
Forex dealers said weakness in local equities and a firm dollar overseas against other currencies also weighed on the rupee.
Indian stocks and the rupee have benefitted from dollar liquidity induced by the US Fed stimulus.
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.
The rupee had lost 11 paise to close at 66.44 against the dollar.
The Indian rupee on Monday appreciated by 16 paise against the American currency in early trade on hopes of increased capital inflows from foreign funds boosted by last week's rally in the stock markets.
The US dollar index was up by 0.16 per cent at 96.53.
The dollar index was up by 0.04 per cent against a basket of six major global rivals.
Forex dealers said month-end dollar demand from oil importers and dollar's gain against other currencies overseas, also put pressure on the rupee.
Banks and importers preferred to increase their dollar position at the current level, a forex dealer said.
The rupee resumed lower at 54.73 per dollar as against the last closing level of 54.69 on the Interbank Foreign Exchange Market.
The rupee's upward movement was aided by a good dose of dollar selling by exporters and some banks, amid a weak dollar overseas, said forex dealers.
The rupee commenced stable at its last closing level of 53.96 at the Interbank Foreign Exchange market.
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.
Forex dealers said strength in euro against the US dollar overseas and increased capital inflows supported the rupee.
The rupee had recorded its biggest slump in two months by plunging 57 paise to close at 55.07 in previous session on Friday.
Due to weakness in domestic equities and strong dollar demand, rupee shed its month and a half high against follar.
Snapping a five-day downward march, the BSE benchmark Sensex on Wednesday shot up by 187.97 points to 18,414.45.
Strengthening of euro against the dollar in overseas market and a higher opening in the equity market supported the rupee.
The dollar index was up by 0.04 per cent against a basket of six major global rivals.
Foreign institutional investors sold domestic shares worth USD 8.36 million (Rs 45.41 crore), according to provisional BSE data.
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.
While the rupee snapped a four-session downslide, it rupee could not cement intra-day gains as RBI kept short-term lending (repo) and cash reserve ratio unchanged, forex dealers said.
Forex dealers said continued capital inflows and a weak dollar overseas also supported the local currency.
The dollar index was down by 0.03 per cent against a basket of six major rivals as Euro rose against the dollar after the Cyprus reached bailout agreement.
Falling for the second day, the rupee on Thursday weakened by 14 paise to close at 54.46 tracking losses in Indian stocks amid sustained dollar demand from importers.
The rupee recovered by 13 paise to close at 66.31 per dollar on fresh selling of dollars by banks and exporters despite fall in equity market.
The dollar index was down by 0.16 per cent against its six major global rivals.
Bearish domestic equities restricted the rupee rise.
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