The rupee staged a modest comeback after a three-straight day fall against the US dollar to end 3 paise higher at 66.89 on easing fears of an imminent US Fed rate hike amid softer overseas sentiment.
Fresh dollar selling by banks and exporters largely helped the home currency to recover from early losses.
The rupee resumed lower at 66.99 as against last close of 66.92 at the Interbank Foreign Exchange (Forex) Market and dropped further to 67.05 in early trade.
However, dollar selling in afternoon deals helped the local unit recover and hit intra-day high of 66.8175 before settling at 66.89, revealing a small gain of 3 paise.
It had lost 55 paise, or 0.83 per cent, in last three-days.
The greenback traded in a narrow range against a basket of currencies after hitting a one-week high overnight. The US dollar index was little changed at 95.53.
On the macro front, wholesale inflation soared to a two-year high of 3.74 per cent in August.
Meanwhile, country's factory output contracted by 2.4 per cent in July in its worst performance in eight months while retail inflation cooled to five-month low of 5.05 per cent, reviving hopes for a rate cut by RBI to boost growth.
The RBI fixed the reference rate for the dollar at 66.9642 and euro at 75.2075.
In cross-currency trades, the rupee strengthened further against the pound sterling to end at 88.33 from 88.76 and also recovered against the Japanese yen to finish at 65.18 from 65.63 per 100 yens earlier.
However, it weakened against the euro to settle at 75.10 as compared to 75.07 previously.
In the forward market, premium for dollar displayed a steady to firm trend in the absence of any market moving factors.
The benchmark six-month premium for February held steady at 175-177 paise, while the forward August 2017 contract edged up to 361-363 paise from 360-362 paise previously.
Meanwhile, equities staged a modest rebound after two days of selling on the back of select buying in banking shares with the benchmark Sensex gaining 18.69 points to end at 28,372.23, while broader Nifty edged up 11 points at 8,726.60.
Crude prices rebounded after a sharp 3 per cent plunge in the previous session.
In the forward market, premium for dollar showed a
steady to firm trend.
The benchmark six-month premium for May was quoted at 131-132 paise from 130-132 paise, while far-forward November 2017 contract moved up to 275-277 paise from 274-275.5 paise yesterday.
Meanwhile, equities succumbed to fresh bouts of profit taking after sharp overnight relief rally as sentiment turned shaky ahead of the much awaited US Fed's decision amid subdued Asian cues despite both retail and wholesale inflation falling.
The benchmark Sensex dropped over 94 points to end at 26,602.84, while broader Nifty shed 39.35 points to 8,182.45.
On the global commodity front, crude prices drifted further after making a failed attempt to run higher as gains fizzled out after API reported that inventories added 4.68 million barrels last week.
