The rupee rebounded after initial losses against the dollar, quoting up by 6 paise at 67.01 following fresh selling of the American currency by banks and exporters on the back of sustained foreign capital inflows and a higher equity market.
The rupee resumed lower as against Thursday's closing level of 67.07 at the Inter-bank Foreign Exchange (forex) market.
It hovered in a range of 67.18 and 66.94 during the morning deals before quoting at 67.01 at 1030 hours.
The dollar index was up 0.08 per cent at 96.25 against a basket of six currencies in early trade.
Overseas, the euro hovered near a 3-week high today, sitting on big gains after the European Central Bank suggested it was done with cutting interest rates for now.
The ECB on Thursday cut its main refinancing rate to zero from 0.05 per cent and increased monthly asset buys to 80 billion euros from 60 billion euros.
Meanwhile, the benchmark BSE Sensex was trading up by 172.78 points, or 0.70 per cent, at 24,796.12 at 1055 hours.
In the overseas market, the US dollar was trading lower
against its major rivals in late Asian trade and hit a fresh 17-month low against the yen as investors gave up on US interest rate hike this year. Another round of speculative yen buying by non-Japanese, short-term players appeared to push up the Japanese currency.
Pramit Brahmbhatt of Veracity Financial Services said, "Today the rupee opened weaker at 66.50/USD compared to previous close at 66.47/USD. But remarkable gain in equity market helped the rupee to gain lost ground. Our benchmark index Nifty gained nearly 100 points and closed at 7,671 level. The rupee appreciated 3 paise and closed at 66.44/USD.
The trading range for the spot USD/INR pair is expected to be in a range of 66.20 to 66.80/USD.
In forward market, premium for dollar edged up on mild buying pressure from corporates.
The benchmark six-month premium for September moved up to 199.5-201.5 paise from 198-200 paise on last Thursday and far-forward March 2017 contract also inched up to 394-396 paise from 392-394 paise previously.
Meanwhile, crude prices rose in Asia today, extending last week's gains from data showing a drop in US production, while traders look ahead to an upcoming meeting of oil majors they hope will lead to limits on output.
The benchmark Sensex rose sharply by 348.32 points or 1.41 per cent to close at 25,022.16.
