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Breaking a four-day downtrend, the rupee on Thursday staged a smart rebound against the US dollar to end higher by 12 paise at 67.82 on fresh selling of the greenback by exporters and banks.
Softer dollar tone overseas and some caution ahead of Fed Chair Yellen's testimony due later on the day largely supported the move.
The decision to maintain a positive outlook on India's Baa3 rating by Moody's also weighed on the trade on Thursday.
The rupee had dropped sharply by over 2% or 151 paise to breach the key 67-mark against the dollar since Trump's election victory amid renewed possibility of the Federal Reserve raising US interest rates.
The outflows were largely on account of unabated selling by foreign portfolio investor (FPI) and hedge funds.
Foreign Institutional Investors offloaded Indian shares worth a net Rs 1,957.04 crore on Wednesday.
However, domestic equities resumed their southward journey after a day of pause and drifted to fresh five-month lows on lingering worries over the government's move to withdraw higher denomination notes which may impact economic growth in the near-term and corporate earnings.
At the Interbank Foreign Exchange (Forex) market, the domestic unit commenced on a better note at 67.89 as against Wednesday's closing value of 67.94.
It gained further ground to hit an intra-day high of 67.76 in the midst of smooth supply of dollar before concluding at 67.82, showing a rise of 12 paise, or 0.18%.
On the global front, the dollar fell back against other major currencies after its surge to a 13-and-a-half-year high overnight.
The dollar index was quoted lower by 0.31% at 100.10 in the afternoon trade.
Meanwhile, the Reserve Bank of India on Thursday fixed the reference rate for the dollar at 67.9106 and for euro at 72.5625.
In cross-currency trades, the rupee weakened further against the pound sterling to end at 84.55 against 84.37 on Wednesday. It fell back against the euro to settle at 72.80 as against 72.70 on Wednesday.
The home unit also retreated against the Japanese yen to finish at 62.24 from 61.97 per 100 yens earlier.
In the forward market, a premium for dollar firmed up further due to sustained paying pressure from corporates.
The benchmark six-month premium for April edged higher to 140.5-142 paise from 138-140 paise and the far-forward October 2017 contract also moved up to 303.75-304.75 paise from 299-301 paise.
Crude prices rose due to expectations of an Opec (Organisation of the Petroleum Exporting Countries) deal to limit production outweighed growing evidence of global oversupply and rising inventories, particularly in the United States.
