The rupee recovered from initial losses and even recovered marginally overnight losses by 6 paise to 63.29 per dollar on fresh selling of dollars by banks and exporters on hopes of more foreign capital inflows into equity market.
The rupee resumed lower at 63.43 per dollar as against Thursday's close of 63.35 at the Interebank Foreign Exchange (Foerx) Market and fell further to a low of 63.4875 on initial dollar demand from importers on the back of higher dollar in the overseas market.
However, it recovered to 63.24 before ending at 63.29 per dollar, showing a gain of 6 paise or 0.09 per cent on fresh selling of dollars by banks and exporters on expectations of more foreign capital inflows in view of strong equity market .
"Bullish domestic equities largely lifted the rupee sentiment," a dealer said.
The dollar strengthened in the global markets on speculation the Federal Reserve is on course to raise interest rates this year while the European Central Bank prepares to extend its stimulus measures.
In New York, the US dollar hit its highest level in nearly nine years yesterday against the basket of currencies, drawing strength from the US economy's outperformance and the diverging outlook for monetary policies among major economies.
The dollar index was up by 0.50 pct against a basket of six major global rivals.
Meanwhile, the Indian benchmark sensex rallied by 380.36 points or 1.38 per cent to end at 27,887.90.
Mr. Pramit Brahmbhatt, Veracity Group CEO said,"The Rupee appreciated as local equities ended up by over one per cent, taking cues from positive global equities which helped rupee to trade firm against the strong dollar. This week Rupee posted its first weekly gain in four weeks. The trading range for the Spot rupee is expected to be within 63.00 to 63.60."
In the forward market, premia recovered on fresh paying pressure from corporates.
The benchmark six-month premium payable in June moved up to 226-228 paise from 224-226 paise previously.
The forward contracts maturing in December also closed higher at 433-435 paise from 425-427 paise.
The Reserve Bank of India fixed the reference rate for dollar at 63.2878 and for Euro at 76.3061.
The rupee bounced back sharply to 97.65 against the pound from 98.47 on Thursday and also firmed up to 76.25 per euro from 76.63.
It moved up to 52.52 per 100 Japanese yen from 52.94 previously.