Rupee pared its initial losses to rebound by 5 paise to 67.22 against the American currency in late morning trade on fresh selling of dollar by banks and exporters in view of a strong opening in domestic equities.
The rupee opened lower by 6 paise at 67.33 as against yesterday's closing level of 67.27 per dollar at the Inter-bank Foreign Exchange (Forex) market.
The domestic unit hovered in a range of 67.34 and 67.21 during the morning deals before quoting at 67.22 per dollar at 1030 hrs.
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The dollar index was trading up 0.01 percent at 97.16 against a basket of six currencies in the early trade.
At overseas, the dollar extended its gains against the yen today, after the Wall Street Journal reported that Japan is considering issuing 50-year bonds as part of an economic stimulus package. The dollar last stood at 106.34 yen, up 1.6 percent on the day.
Meanwhile, the benchmark BSE Sensex was trading up by 198.26 points or 0.71 per cent to 28,174.78 at 1030 hrs.
Meanwhile, foreign portfolio investors (FPIs) sold shares
worth a net Rs 206.40 crore yesterday as per provisional data from exchanges.
In the forward market, premium for dollar displayed a steady to firm trend.
The benchmark six-month premium for February settled virtually steady at 159.5-161.5 paise, while the forward August 2017 contract edged higher to 342-344 paise from 341.5-343.5 paise previously.
Meanwhile, domestic equities continued their downtrend for third straight day in a row as market sentiment remained bearish due to recent sell-offs and also steep valuations, while most Asian indices recovered from overnight sharp fall.
The flagship BSE Sensex dropped 70.58 points to end at 28,223.70, while Nifty fell 16.65 points to 8,706.40.
Crude prices drifted sharply after both Iran and Saudi Arabia played down expectations for a oil output freeze deal at the closely watched informal OPEC meeting on Wednesday.
The production cut talks between OPEC and non-OPEC oil producers will take place at the three-day oil conference in Algiers next week.
