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 commenced stable at its last closing level of 53.96 at the Interbank Foreign Exchange market.
The rupee had recorded its biggest slump in two months by plunging 57 paise to close at 55.07 in previous session on Friday.
Forex dealers said strength in euro against the US dollar overseas and increased capital inflows supported the rupee.
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.
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 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.
The dollar index was down by 0.16 per cent against its six major global rivals.
Bearish domestic equities restricted the rupee rise.
The local currency had lost 16 paise to close at 54.17 on Monday due to fresh dollar demand from importers and some banks.
The rupee appreciated for the second straight day to close 14 paise higher at 54.54 on optimism that government would get Parliamentary approval to FDI in multi-brand retail, leading to big inflow of dollars.
Investors are anxious over the US-China trade tension, a sharp devaluation in yuan and uncertainty over Kashmir issue.
Forex dealers said a higher opening in the domestic equity market and strengthening of euro against the dollar overseas also supported the rupee.
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 recovered its early losses and was trading up by 0.11 per cent against a basket of six major rivals.
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.
Forex dealers said euro's gains against the American currency in the overseas market also supported the rupee.
Dealers attributed the rupee's fall to increased demand for the US currency from importers.
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 Indian rupee continued its downward march and fell by another 48 paise to 46.53 against the US dollar in early trade on Tuesday owing to melting Asian stock markets amid heavy demand for the greenback.
Extending losses for the third straight session, the rupee today lost 28 paise to end at an over one-week low of 53.50, due to sustained dollar demand from importers amid sluggish local stocks.
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.
Sustained foreign funds did manage to arrest the fall to some extent.
Forex dealers said sustained foreign fund flows also aided the trading sentiment in rupee's favour.
The rupee resumed higher at 53.26 per dollar.
Forex dealers said slight weakness in dollar overseas capped the rupee's losses to some extent.
This is the second biggest rise since September 21 last year, when rupee had gained by 93 paise, or 1.71 per cent.
A higher opening in the domestic equity market and the strengthening of euro and yen against the dollar overseas also aided the rupee, dealers said.
Forex dealers said bouts of heavy dollar demand from banks and oil importers amid lower equities attributed the rupee sentiment.
Forex dealers said besides dollar's gains against euro and yen overseas, increased demand from oil importers for the American currency and a weak opening in the stock market also put pressure on the rupee.
The rupee resumed higher at 59.10 per dollar as against the last Friday's closing level of 59.17 at the Interbank Foreign Exchange market.
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.
On Monday, the biggest gainers in the Sensex pack were Sun Pharma, Bajaj Finance, Vedanta, Yes Bank, Tata Motors, HCL Tech, IndusInd Bank and Kotak Bank, HCL Tech, Infosys and Bajaj Auto.
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