The domestic currency resumed higher at 62.45 per dollar as against the last closing level of 62.50 at the Interbank Foreign Exchange market.
It moved in a range of 62.34 and 62.53 before quoting at 62.42 per dollar at 1045 hours.
Banks and exporters preferred to reduce their dollar position in view of good foreign capital inflows into equity market.
Meanwhile, the benchmark BSE-30 share Sensex moved down by 69.18 points, or 0.34 per cent, to 20,535.90 at 1045 hours.
The dollar pulled back against the yen in Asia in their early trade as its recent rapid rise to a high of nearly six months prompted investors to cash in profits, but traders see the adjustment moves as small and temporary.