In contrast to falling equities, the rupee today recovered 23 paise to end at 59.78 against the dollar after exporters and some banks sold the US currency.
Yesterday, the rupee fell by 29 paise -- logging its biggest drop in nearly three weeks.
The Indian rupee today commenced higher at 59.93 a dollar from previous close of 60.01 at the Interbank Foreign Exchange (Forex) market.
It moved in a range of 59.68 and 60.00 before concluding at 59.78, exhibiting a rise of 23 paise or 0.38 per cent. Yesterday, it had dipped by 0.49 per cent.
"Selling of dollar by the exporters may have been the reason for the appreciation...," said Kiran Kumar Kavikondala, Director & CEO, WealthRays Securities.
Expectations of more foreign fund inflow also helped after the Railway Budget for 2014-15 proposed to attract FDI in infrastructure projects.
However, the benchmark S&P BSE Sensex today plunged by a whopping 517.97 points, or 1.98 per cent.
FIIs infused USD 130.70 million yesterday, as per provisional data with stock exchanges.
The dollar index was up 0.05 per cent against its major six global rivals.
Meanwhile, the premium for forward dollar softened further on persistent receipts by exporters.
The benchmark six-month premium payable in December slipped to 247-249 paise from 248-250 paise previously.
Far-forward contracts maturing in June, 2015 also eased to 494-496 paise from 495-497 paise.
The Reserve Bank of India fixed the reference rate for dollar at 59.7968 and for the euro at 81.3225.
The rupee also rebounded against the pound to 102.37 from last close of 102.79 and also recovered to 81.28 per euro from 81.60. It rose to 58.77 per 100 Japanese yen from 58.87.