The domestic currency opened lower at 65.80 against yesterday's level of 65.75 at the Interbank Foreign Exchange (Forex) market and dropped further to 65.84 on demand for dollars from banks.
However, it trimmed initial losses and recovered to 65.72 on selling of greenback by exporters before finishing at 65.76, still showing a loss of just one paise or 0.02 per cent. The local unit has dropped 27 paise, or 0.41 per cent, in two days.
It hovered in a range of 65.72 and 65.84 during the day.
The dollar index traded higher by 0.11 per cent against a basket of six currencies in late afternoon trade. In Asian market, the dollar stabilised today as investors awaited the US jobs report to help them weigh the odds of a Federal Reserve rate increase this year.
Momentum on the US dollar's rise, which hit multi-month highs against the euro and the yen yesterday, tapered off on Friday after data showed new applications for unemployment benefits last week logged a bigger-than-expected jump in the US.
Meanwhile, the benchmark BSE Sensex ended lower by 38.96 points, or 0.15 per cent, at 26,265.24.