The rupee recouped early losses and was stronger in afternoon trades on Monday as the local share market pulled back from its lows and dollar inflows aided.
At 2:28 p.m.the rupee was at 52.5950/6000 to the dollar, stronger than Friday's close of 52.7150/7250. The unit had dipped to 52.87 in early trade.
Traders said strong interest from foreign funds looking to invest in Indian debt prompted dollar flows which aided the rupee.
Foreign funds have to use up the limits to buy government debt by mid-January, which will otherwise expire.
The BSE Sensex was down 0.4% after falling as much as 1%.