A weak dollar overseas also helped the rupee to land in positive terrain at the end while FII outflows of about Rs 1,285 crore capped the rise, forex traders said.
At the Interbank Foreign Exchange (Forex) market, the domestic unit resumed better at 59.64 a dollar from overnight close of 59.68, also its all-time closing low.
The rupee moved in a range of 59.45 and 59.79 before settling the day at 59.66, showing a rise of two paise.
Yesterday, it had fallen by 41 paise or 0.69 per cent.
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The Indian benchmark S&P BSE Sensex today closed up by 88.26 points in choppy trade.
The dollar index was down by 0.15 per cent against its major global rivals.
"The rupee was seen erasing its earlier losses against the US dollar and started posting gains as domestic stock markets started recovering. Majority of the Asian currencies were seen trading on a positive note against the US dollar, which further supported rupee to post gains," said Abhishek Goenka, Founder and CEO, India Forex Advisors.
Globally, it was a mixed session for the Asian markets with some currencies trying to rally early in the session on hopes that a PBOC new conference would allay investor fears of a liquidity crunch in the Chinese markets.
The correction in the dollar rally could accelerate if the US data disappoints the market, said forex experts.
In order to arrest rupee depreciation, Reserve Bank has a capacity to sell up to USD 30 billion from the forex reserves, foreign brokerage Bank of America Merill Lynch has said.