The rupee largely shrugged off the high volatility in stocks and rebounded sharply towards the fag-end trade following bout of dollar selling by exporters
The rupee on Thursday recovered from early losses against the American currency and ended marginally higher by 3 paise at 67.17 on mild dollar selling by banks and exporters.
The domestic currency largely shrugged off the high volatility in stocks and rebounded sharply towards the fag-end trade following bout of dollar selling by exporters and also aided by greenback's weakness against some currencies overseas, a forex dealer said.
Moreover, the ECB rate decision later in the day largely focused on trade.
The rupee resumed a tad lower at 67.22 as compared to Wednesday's closing value of 67.20 at the Interbank Foreign Exchange (Forex) market and dropped further to hit an intra-day low of 67.27 on sustained dollar demand.
However, the home unit staged a solid rebound towards the tail-end trade in the face of smooth dollar supply and managed to settle higher by 3 paise, or 0.04 per cent, at 67.17.
It had finished 10 paise lower yesterday.
The US dollar index, which hit a more than four-month high on Wednesday, was down by 0.10 percent at 97.06 in early trade.
The RBI fixed the reference rate for the dollar at 67.2035 and euro at 74.1523.
The local unit, however, fell back against the Japanese yen to close at 63.22 per 100 yens from 63.07 earlier.
FIIs remained net buyers of Indian securities and bought a net of Rs 215.21 crore on Wednesday, according to provisional data from exchanges.
In the forward market, premium for dollar weakened further due to sustained receivings from exporters.
The benchmark six-month premium for December fell to 175-177 paise from 178-180 paise and forward June 2017 contract also moved down to 374-376 paise from 376-378 paise previously.
Meanwhile, equities retreated sharply after a two-day rally on fresh profit-taking by investors amid some caution ahead of the ECB policy meeting later in the day despite strong Asian markets, which rallied on hopes of more stimulus from the Bank of Japan and record Wall Street closing.
The flagship Sensex plunged 205.37 points to finish at 27,710.52, while broader Nifty dropped 55.75 points to 8,510.10.
In worldwide trade, the dollar touched a six-week high against the yen on Thursday, bolstered by reports that Bank of Japan (BoJ) is planning a fiscal stimulus package worth 20 trillion yen, bobbling of the initial sum of 10 trillion yen that was previously mentioned.
In European currencies, the euro cautiously climbed back above 1.10 dollars ahead of the ECB's policy announcement where investors will be looking for the central bank's response to the Brexit fallout.
The pound meanwhile extended yesterday's gains to rise to 1.3250 dollars in late Asian trading boosted from a Bank of England survey that showed only a limited impact on business sentiment after the Brexit vote.
Oil prices traded slightly higher after rebounding from two-month low after the US Energy Department reported a ninth straight week of crude inventory draws, easing some concerns in a market worried about a glut.
Crude oil prices staged an impressive recovery yesterday on news that US crude inventories fell 2.3 million barrels in the week ending July 15, data from the US Energy Information Administration showed.