On Wednesday, helped by falling crude oil prices, the rupee rebounded from its all-time low level and ended the day 18 paise higher at 82.82 (provisional) against the US dollar.
The Reserve Bank of India (RBI) is rumoured to have intervened, along with the dollar's weakening in the international market, the strength of Asian rivals, and other factors, according to forex dealers.
However, sustained foreign fund outflows and a weak trend in domestic equities restricted the appreciation bias to some extent.
At the interbank foreign exchange market, the local unit opened at 82.87 and touched an intra-day high of 82.74 and a low of 82.91 against the greenback.
It finally settled at 82.82, registering a rise of 18 paise over its previous close.
On Tuesday, the rupee had slumped 22 paise to close at its all-time low of 83 against the dollar.
"The Indian rupee snapped a two-day fall as the dollar index wiped out most gains of Tuesday and crude oil declined more than 2 per cent to USD 80 a barrel. The stronger Asian currencies and suspected RBI intervention around 83 also supported the local unit," said Dilip Parmar, Research Analyst, HDFC Securities.
The dollar index, which gauges the greenback's strength against a basket of six currencies, declined 0.52 per cent to 103.97.
On the domestic equity market front, the 30-share BSE Sensex declined 636.75 points or 1.04 per cent to end at 60,657.45, while the broader NSE Nifty fell 189.60 points or 1.04 per cent to 18,042.95.
Global oil benchmark Brent crude futures fell 2.13 per cent to USD 80.35 per barrel.
Foreign Institutional Investors (FIIs) were net sellers in the capital markets on Tuesday as they offloaded shares worth Rs 628.07 crore, according to exchange data.
According to a monthly poll released on Wednesday, the growth of the Indian services industry reached a six-month high in December on the back of a strong intake of new business and favourable market conditions.
With inputs from Agencies.
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