Dealers said besides higher opening in local equities and selling of the US currency by exporters, euro's gains against the American currency on positive developments in Greece supported the rupee.
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.
The dollar firmed up against some global currencies.
Forex dealers said a firm rise in local equities and sluggish dollar overseas also boosted the sentiment in rupee's favour.
Forex dealers said a weak dollar overseas also boosted the rupee sentiment, cutting short a two-day losing trend.
The rupee was at 61.09, breaching the previous low of 60.76 hit on June 26. It had closed at 60.225/235 on Friday.
the rupee had closed steady at 67.95 per dollar on Monday.
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.
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 besides dollar selling by exporters, a higher opening in domestic equity market helped the rupee to strengthen.
Forex dealers said firm local equities, signs of consistent capital inflows and sustained dollar selling by exporters also boosted the rupee sentiment.
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.
The rupee strengthened by 36 paise to 54.48 against the US dollar in early trade today at the Interbank Foreign Exchange on selling of American currency by exporters and banks.
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.
Dealers said firm local equities amid sustained capital inflows limited the rupee's fall.
The rupee also recovered against the pound sterling to 87.01 from overnight close of 87.20 and also recouped losses against the euro to 69.66 from 69.84.
The dollar index, consisting of six major currencies, was up by 0.35 per cent, ahead of tomorrow's US Federal Reserve meeting.
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 dollar index was down by 0.23 per cent against a basket of six major rivals after the US Federal Reserve continued to express concern about the economy and made no changes to its ultra-easy monetary policies.
There was fresh dollar demand from banks and importers.
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.
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.
Forex dealer said increased demand for the American currency from oil importers and dollar's gains against other currencies overseas mainly put pressure on the local unit.
The rupee also recouped against the pound sterling to end at 85.01 from overnight close of 85.15 and also rebounded against the Japanese yen to 67.04 per 100 yen from 67.38.
The Indian stock market benchmark Sensex, which was down till afternoon session, recovered later and closed up by 38.37 points or 0.21 per cent after Europe opened higher.
It touched a low of 53.16 on continued dollar demand from importers and some weakness in stocks in the initial stage.
A weak dollar in overseas market in view of the Federal Reserve's cautious stance on interest rate strengthened the rupee value.
Forex experts said the dollar index, a gauge of six major global rivals, was marginally up ahead of US non-farm payroll data later in the evening while New York crude oil was quoting below USD 91 a barrel in Europe today.
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 gained 11 paise to close at a fresh over 18-week high of 53.36 against the dollar in the previous session.
The rupee lost 2 paise to end at 53.47 against the dollar in Monday's session on heavy month-end dollar demand from importers and weakness in equities.
The rupee had lost 10 paise to close at 54.62 on Monday.
Weakness of dollar in the overseas market also boosted the rupee value, a forex dealer said.
The rupee resumed higher at 54.15 per dollar as against last closing level of 54.38 at the Interbank Foreign Exchange Market and firmed up further to 54.00 at 1040 hours.
The rupee hovered in a range of 63.75 and 63.84.
Snapping its two-day losing streak, the rupee on Monday bounced back by 9 paise to 66.67 against the US dollar.
Banks and exporters preferred to reduce their dollar position on hopes of further capital inflows as foreign portfolio investors infused $107.22 million yesterday as per the record of Securities and Exchange Board of India.
The dollar index was trading lower by 0.03 per cent against its major global rivals today.
With dollar demand rising, it dropped further to 55.49, before ending slightly better at 55.43 -- a loss of 22 paise or 0.39 per cent over Wednesday.
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