The rupee today snapped its six-session losses to end higher by 10 paise at 66.38 against the
US dollar due to fresh selling of American currency by exporters and banks.
The Indian currency had touched a high of 66.29 in early trade before surrendering those gains.
The rupee fell nearly 2 per cent against US dollar in the previous six sessions amid rising crude prices, sustained capital outflows and growing concerns over widening trade deficit.
Although, trade war fears have moderated temporarily, currency traders still appeared slightly cautious at this moment and avoided taking any long positions.
On the global energy front, crude oil rose for a sixth day to hit a fresh multi-year high and breached the significant USD 75 a barrel, buoyed by expectations of reduced global supply and speculation of fresh US sanctions against Iran.
The international benchmark, brent futures were trading sharply higher at USD 74.16 a barrel in early Asian trade. It briefly touched USD 75.27 a barrel - highest since November 27, 2014.
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In the meantime, building on overnight gains, the greenback strengthened broadly against major trading rivals boosted by surging US bond yields and ahead of first-quarter US GDP data this week amid prospects of further tightening by the Federal Reserve.
The rupee opened higher at 66.42 as compared to 66.48 at the inter-bank foreign exchange (forex) market.
Maintaining its recovery momentum, it gained further strength to hit session's high of 66.29, but eventually surrendered most early gains towards the tail-end trade due to firming dollar trend overseas.
It finally closed the day at 66.38, showing a smart gain of 10 paise, or 0.15 per cent.
The RBI, meanwhile, fixed the reference rate for the dollar at 66.3622 and for the euro at 81.0548.
"After six days of fall, rupee gained marginally, lifted by the positive sentiments in the equity markets. However, the inclination still remained weak on FII outflows and strong oil prices... Meanwhile, US dollar edged higher against major currencies on the continued rising of US bond yields, ahead of upcoming FOMC meet..," Anand James, Chief Market Strategist at Geojit Financial Services, said.
The bond market also witnessed a rebound with the 10-year benchmark yield falling to 7.68 per cent from 7.74 per cent.
In the meantime, domestic equities maintained their bullish ascent for the second-day largely driven by healthy earnings from select blue-chips also broadly supported by firm Asia cues despite a lukewarm Wall Street lead.
The dollar index, which measures the greenback's value against a basket of six major currencies, was up at 90.72.
In the cross currency trade, the rupee hardened against the pound sterling to settle at 92.60 from Monday's finish of 92.72 and firmed up against the euro to end at 81.07 as compared to 81.30.
The home unit also gained ground against the Japenese yen to close at 61.01 per 100 yens from 61.43 earlier.
Elsewhere, the common currency euro shed further ground against the greenback after the German IFO came in below expectations for the current month.
In forward market today, premium for dollar declined owing to fresh receiving from exporters.
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