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The rupee appreciated 4 paise to close at 83.28 (provisional) against the US dollar on Wednesday, supported by easing crude oil prices and foreign fund inflows.
However, forex traders said the Indian currency remained under pressure amid a negative trend in domestic equities.
At the interbank foreign exchange market, the rupee opened at 83.30 against the greenback.
The rupee oscillated between an intra-day low of 83.33 and a high of 83.25 against the greenback and finally settled at 83.28 (provisional) against the dollar, higher by 4 paise from its previous close, even as domestic benchmark indices were trading in a negative note.
On Tuesday, the rupee settled at 83.32 against the dollar.
"The Indian rupee recouped morning losses, as the greenback traded steady ahead of the Federal Open Market Committee (FOMC) meeting minutes," said Dilip Parmar, Research Analyst, HDFC Securities.
"This week we have a data-heavy week starting Wednesday, we have payroll, we have ISM so it is obvious traders and investors are reducing exposures by moving away from crowded dollar short trade," Parmar added.
Parmar further noted that back home, spot USD-INR has been facing resistance near 83.50 and holding the support of 83.20. "Technically, there is a high probability of the pair moving towards 83.50 at a slower pace," he said.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.08 per cent higher at 102.28 on Wednesday.
Brent crude futures, the global oil benchmark, declined 0.41 per cent to $75.58 per barrel.
On the domestic equity market front, Sensex fell 535.88 points, or 0.75 per cent, to 71,356.60 points. The Nifty declined 148.45 points, or 0.69 per cent, to 21,517.35.
Foreign institutional investors (FIIs) were net buyers in the equity market on Tuesday as they purchased shares worth ₹1,602.16 crore, according to exchange data.
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