At the Interbank Foreign Exchange (Forex) market, the rupee resumed lower at 52.66/67 per dollar against the last closing level of 52.50/51 per dollar.
The domestic currency fell further to the day's low of 52.90 due to sustained dollar demand and weak equity markets.
However, a recovery in stock markets and a weak dollar overseas helped the rupee to recoup the losses to some extent.
Persistent dollar demand from banks and importers mainly affected the rupee value against dollar, a dealer said.
"Rupee is trading at three-and-a-half months low against US dollar on account of India's weak economic fundamentals, widening trade deficit and possible speculative dollar buying," Abhishek Goenka, India Forex Advisors CEO said.
"Other major reasons behind weakening of rupee are increasing oil demand and global uncertainty," he said.
In Sydney market, the dollar lost ground against most rivals in Asian trading hours in early trade, ahead of the start of a two-day policy meeting of the US Federal Reserve. In London, the euro edged higher against the dollar.