A possible RBI intervention in the forex market to curb short-term volatility in the rupee and dollar unwinding by speculative traders largely supported the recovery momentum, a forex dealer said.
Escalating geopolitical tensions with worries about Western military intervention in Syria alongside impending trade dispute between the US and China remained causes of concerns for the forex market, despite bullish local equities.
Indian equities emerged as the only standout gainer among its Asian peers, extending gains to a sixth session.
Meanwhile, all emerging Asian currencies posted losses.
Overall, forex market sentiment was kept in check with developing global stories, even as currency speculators and traders awaited vital domestic macro-economic data -- IIP and inflation -- which was released later in the day.
Meanwhile, crude prices declined from its fresh 4-year highs weighed down by ample supplies, though worries over military escalation in Syria and trade tensions between the US and China kept energy market buoyant.
Brent crude, an international benchmark, was trading near a four-year peak of $71.50 a barrel in early Asian trade. It had hit a high of $73 a barrel on Wednesday.
Extending its weakening trend, the rupee today opened weaker at 65.33 as compared to 65.31 at the inter-bank foreign exchange (forex) market.
It later broke down its consolidation phase and touched a fresh session low of 65.45 in mid-morning deals underpinned by worries over global developments.
However, taking a sudden U-turn, the local unit made a spectacular rebound towards the fag-end to conquer session's high of 65.24 before finally ending the day at 65.26, showing a gain of 5 paise, or 0.08 per cent.
The RBI, meanwhile, fixed the reference rate for the dollar at 65.3496 and for the euro at 80.7982.
Globally, the dollar is trading higher against its major trading rivals after US President Donald Trump signalled that military strikes in Syria may not be imminent.
The dollar index, which measures the greenback's value against a basket of six major currencies, was down at 89.55.
In the cross-currency trade, the rupee bounced back against the euro to end at 80.53 from 80.85 and also recouped against the Japanese yen to finish at 60.93 per 100 yens from 61.16 yesterday.
The home currency, however, continued its downtrend against the pound sterling and settled at 92.71 from 92.59 earlier.
Elsewhere, the common currency retreated sharply from its two-week high against the US dollar ahead of ECB monetary policy meeting minutes release amid weak euro-zone industrial output and fears about an escalation in Syria.
The British pound, however, traded little changed.
In forward market today, premium for dollar fell sharply due to heavy receiving from exporters.
The benchmark six-month forward premium payable in August moved down to 96-98 paise as compared to 101-102 paise and the far-forward February 2019 contract also slumped to 214-216 paise from 221.50-222.50 paise previously.