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The rupee reversed its direction to trade at 61.17/18 versus Monday's close of 61.0950/1050.
The Indian unit had earlier hit 60.90, its highest level since September 23.
Traders expect USD/INR to move in a range of 60.90 to 61.30.
The Nifty is trading 0.4% lower, while the Sensex is down 0.3%.
The dollar rebounded modestly against yen and euro following steep falls overnight.
September WPI inflation hit a near five-year low of 2.38%.
Traders expect caution to prevail ahead of the Maharashtra election on Wednesday.
