Forex dealers said continued capital inflows and a weak dollar overseas also supported the local currency.
The rupee commenced lower at 54.47 against the dollar from its previous close of 54.36 on Tuesday at the Interbank Foreign Exchange market.
It eased further to a low of 54.48 on the back of weakness in stocks and sustained month-end dollar demand in morning deals.
Later, the rupee bounced back on smart recovery in local share markets to a high of 54.25 before settling at 54.29, a net rise of seven paise, or 0.13 per cent from its previous close.
The rupee has fallen over seven per cent this fiscal from 50.73 on April 3 last year, the first day of trade of 2012-13.
Foreign institutional investors bought Indian shares worth $105.7 million (Rs 573.87 crore)
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