Snapping the three-day losing streak, the rupee today gained a massive 47 paise against the dollar to close the day at 60.60 amid heavy selling of the US currency by corporates, exporters and banks.
The dollar index was also down by 0.07 per cent, following new tension between Ukraine and Russia.
"Heavy selling of dollars by corporates helped the rupee. They started selling at 61.10 level," said a dealer with a state-owned bank.
At the Interbank Foreign Exchange (Forex) market, the domestic unit commenced at 61.06 but declined to a low of 61.15.
It later recovered sharply to a high of 60.54 before ending at 60.60, showing a rise of 47 paise or 0.77 per cent from its previous close.
In the previous three sessions, the domestic unit had lost by 78 paise or 1.29 per cent.
Forex dealers attributed the late surge in rupee to the absence of oil companies in the market for their dollar needs
The BSE benchmark Sensex today plunged by 188.47 points or 0.82 per cent after touching a new peak intra-day. FIIs injected Rs 767.61 crore on Wednesday, as per provisional data with stock exchanges.
The benchmark six-month premium payable in September ended at 210.5-212.5 paise against 213.5-215.5 paise previously.
Far forward contracts maturing in March, 2015 settled at 449-451 paise against 452-454 paise.
The Reserve Bank of India fixed the reference rate for dollar at 61.1163 and for the euro at 84.5220.
The rupee rebounded against the pound to end at 101.88 from 102.61 previously and also shot up against the euro to 83.85 from 84.51.
It firmed up to 59.38 per 100 Japanese yen from 59.73.