The local unit resumed higher at 55.28 per dollar as against Friday's closing level of 55.34 per dollar at the Interbank Foreign Exchange (Forex) Market and firmed further to 55.20 on sustained dollar selling by exporter and some banks amid strong local equity market.
However, it reacted downwards to 55.40 per dollar on month-end dollar demand from importers, mainly in oil refiners, before quoting at 55.38 per dollar at 1040 hours.
In New York, dollar erased most of its losses on last Friday after the euro briefly jumped following more comments from European Central Bank President Mario Draghi about policy options.
Meanwhile, oil prices were showing mixed trends in Asian early trade today as investors await further measures by policymakers to boost the ailing euro-zone and US economy, analysts said.
New York's main contract, light sweet crude for September delivery eased 13 cents to USD 90.00 a barrel.
The Indian benchmark sensex was quoted higher by 156 points, or 0.93 per cent, at 1050 hours.