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.
Snapping its two-day losing streak, the rupee on Monday bounced back by 9 paise to 66.67 against the US dollar.
The US dollar surged to fresh one-year high after the Fed chief's testimony to the US Senate on Wednesday bolstered the expectations of interest rate hikes, though gradually.
It touched a low of 53.16 on continued dollar demand from importers and some weakness in stocks in the initial stage.
The rupee hovered in a range of 63.75 and 63.84.
The dollar index was trading lower by 0.03 per cent against its major global rivals today.
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.
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 rupee had lost 10 paise to close at 54.62 on Monday.
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.
Weakness of dollar in the overseas market also boosted the rupee value, a forex dealer said.
Therupee staged a smart rebound from its low towards the fag-end trade on dollar selling as well as suspected intrusion by the Reserve Bank to end steady at 63.39.
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.
On Wednesday, the rupee ended barely steady at 64.93.
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 had gained 16 paise to close at over one-month high of 62.16 on Monday against the American currency on persistent selling of dollars by banks and exporters on hopes of capital inflows into domestic markets.
At the Interbank Foreign Exchange market, the domestic unit resumed lower at 54.42 a dollar from overnight close of 54.26 and moved in a narrow range of 54.34 and 54.46.
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.
The rupee had lost 8 paise to end at 55.44 against the dollar in Monday's session on fresh dollar demand from importers.
The rupee had strengthened by 30 paise to close at two-week high of 55.36 against the dollar in Friday's trade on the back of capital inflows.
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 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.
Besides, steady euro against the American unit and a higher opening in the domestic equity market supported the rupee, forex dealers said.
Foreign institutional investors pumped around Rs 100 crore (Rs 1 billion) in stocks on Tuesday.
Banks and exporters preferred to reduce their dollar position at the current stage in view of sustained capital inflows coupled with weakness in dollar overseas, forex dealers said.
Some weakness in the local stock market amid a rising trend pared rupee's early gains, forex dealers said.
Continued dollar selling by exporters and some banks on hopes of further fall in dollar value overseas also aided the rupee rise.
The rupee resumed better at 54.52 a dollar from previous close of 54.56 at the Interbank Foreign Exchange market and immediately touched a low of 54.56.
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.
The rupee fell by 34 paise to 55.99 against the US dollar in early trade at the Interbank Foreign Exchange market today as the American currency gained against other currencies overseas.
The rupee on Tuesday tumbled by 32 paise to close at 64.17 on fresh dollar demand from importers.
Forex dealers said dollar selling by exporters and a higher opening in the equity market also supported 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 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.
The rupee closed almost flat at 65.76 against the US dollar on some demand for the American currency from banks.
The rupee has dropped by 49 paise or 0.75 per cent in four days.
The rupee fell sharply by 32 paise at 66.37 against the US dollar in early trade on Tuesday.
In the last four days, rupee has lost 104 paise against the dollar.
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