The rupee pared its initial losses to trade at 63.50 a dollar, still down by 2 paise, in late morning deals on sustained bouts of dollar demand from importers and banks.
The rupee opened lower at 63.55 per dollar, retreating from yesterday's 2-1/2 years closing highs of 63.48 a dollar at the inter-bank foreign exchange market today.
The domestic unit hovered between 63.5750 and 63.4950 per dollar, before quoting at 63.50 at 1020 hrs.
The US dollar was mixed against major rivals in early Asian trade, while the euro traded within sight of its highest level in three years.
The 30-share BSE Sensex is trading higher by 119.73 points, or 0.35 per cent, at 33,931.99 at 1045 hrs.
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