Besides, a higher opening in the domestic equity market and strengthening of the euro against the dollar overseas following a long-awaited bailout deal for Greece, supported the rupee, forex dealers said.
The rupee had lost 23 paise to end at 54.09 in Tuesday's trade due to month-end dollar demand.
The NSE Nifty ended 55.75 points, or 0.57 per cent, higher at 9,912.80 after moving between 9,925.75 and 9,882.
Forex dealers say dollar rose against the euro after the European Union cut its economic growth forecast.
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.
In line with rally in stocks, the Indian rupee on Monday appreciated for the second straight session and closed with a eight paise gain at a one-week high of 61.36 against the Greenback.
Forex dealers will keenly watch, instead, if the central bank indicates more measures to stabilise the currency or gives a timeframe for its current action.
The rupee's strength has had an overall negative effect on merchandise trade
On Monday, the rupee had lost 14 paise to close at 66.62 against the US dollar.
The industrial production grew by two per cent in September, mainly on account of better performance by power and mining sectors.
The local currency had gained 10 paise to close at 63.51.
The rupee had gained 5 paise to end at 55.62 against the dollar on selling of the American currency by exporters in Wednesday's session.
The rupee extended its fall for the fourth consecutive day by losing another 6 paise to hit a fresh one-month low of 62.31.
A fresh demand for the US currency from importers weighed on rupee.
The rupee had tumbled by 33 paise to close at 54.47 against the US currency in the previous session on Friday, due to a firm dollar overseas.
The ECB on Thursday cut its main refinancing rate to zero from 0.05 per cent.
The rupee has declined by 24 paise in four days of losses.
In the forward market, the premium for dollar moved up on fresh paying pressure corporates.
The Rupee is likely to recover during day trad, say currency watchers.
In overseas trade, the American currency traded lower against the yen and the euro in an Asian session as well as modest profit-taking after recent sharp gains
ICICI Bank chief Chanda Kochhar on Wednesday said the country has many positives like high forex reserves, and low current account and fiscal gaps, which can help it weather the ongoing volatilities.
ICICI Bank was the top gainer in the Sensex pack, rising around 3 per cent, followed by Axis Bank, HDFC twins, SBI, L&T, ONGC and Infosys. On the other hand, Sun Pharma, Asian Paints, Nestle India, UltraTech Cement and HUL declined. NSE Nifty rose by 79.60 points or 0.67 per cent to 11,914.20.
Falling for the third day, Indian rupee on Wednesday weakened by 14 paise to close at over one-week low of 62.02 against the Greenback.
In a quiet trade at the Interbank Foreign Exchange (Forex) market, the local currency resumed firm at 39.46/48 a dollar from Wednesday's close of 39.5450/5500 a dollar, but later trimmed gains at 39.49/50 per dollar in late morning deals. It swung in a range of 39.46 and 39.53 in early trade.
A weak dollar in overseas markets also strengthened the rupee sentiment
The rupee declined for fourth day in a row by losing 16 paise to Rs 52.88 per dollar in early trade today, weighed down by dollar's gains overseas.
The rupee declined for fourth day in a row by losing 16 paise to Rs 52.88 per dollar in early trade today, weighed down by dollar's gains overseas.
The rupee on Tuesday lost 11 paise to Rs 55.85 against the US dollar in early trade on the Interbank Foreign Exchange following dollar gains against other currencies overseas amid a weak trend in the equity market.
Frantic dollar demand from corporates along with an aggressive hedging strategy adopted by importers in the wake of the currency volatility predominately took a toll on the domestic unit despite moves by the central bank to stabilise the currency.
The rupee gained 49 paiss on Thursday to end at over 4-1/2-month high of 53.02 against the US dollar on heavy selling of the American currency by exporters and some banks.
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 local currency lost some of the gains after the forex market realised that RBI's decision would result in only up to $3 billion extra dollar supply in the market in initial stages.
The rupee firmed up by 15 paise to close at 62.36 per dollar on fresh selling by banks
Some weakness in the local stock market amid a rising trend pared rupee's early gains, forex dealers said.
The US dollar jumped in overseas market on Wednesday.
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 Indian rupee ended slightly lower at 64.01/02 per dollar compared with Tuesday's close of 63.98/99 per dollar due to month-end dollar demand by importers.
FIIs bought stocks worth just Rs 83.16 crore as per provisional data.
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.
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.
