The Indian unit resumed higher by 67.35 against yesterday's closing level of 67.38 at the Interbank Foreign Exchange (Forex) market.
Later, it hovered between a high of 67.32 and low of 67.43 before quoting at 67.39 at 1030 hrs.
Meanwhile, the dollar index was up 0.08 per cent at 96.73 against a basket of six currencies in the early trade.
Overseas, the dollar was stable against its major rivals in early Asian trade, as markets waited for fresh guidance from the Federal Reserve.
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the yen at 61.32 per 100 yens.
The dollar was moderately higher against the yen in the late afternoon trade, with investors avoiding making major moves given a lack of fresh trading cues.
Investors are watching data and events this week, including January-March Japan gross domestic product data due Wednesday.
Tokyo-based dealers and analysts said a weak result will increase hopes that the government will implement extra stimulus to push up the dollar against the yen. The median forecast from a survey of 20 economists by the Wall Street Journal was for inflation-adjusted growth of 0.3 per cent.
US benchmark West Texas Intermediate (WTI) for delivery in June was up 62 cents, or 1.34 per cent, at USD 46.83 a barrel. Brent North Sea crude for July was up 62 cents, or 1.30 percent, at USD 48.45.
Meahwhile, the Indian benchmark sensex ended higher by 163.66 points or 0.64 per cent to 25,653.23.
Pramit Brahmbhatt of Veracity Financial Services said, "Continuing weakness of previous day, the rupee opened on a negative note above 66.90/USD. But selling pressure in USD dragged it below the level. Strength in crude oil price governed rupee move, by putting pressure on it.
In forward market, premium for dollar eased on persistent receivings from exporters.
The benchmark six-month premium for October moved down to 193.5-195.5 paise from the last weeeknd's level of 195-197 paise and far forward April 2017 contract also declined further to 399.5-401.5 paise from 401-403 paise.