The rupee ended higher by 31 paise at 60.09 as the American dollar strengthened after the US Federal Reserve indicated that the interest rates are likely to remain lower for some more time.
The dollar declined to its weakest level in three weeks on Thursday.
The Indian rupee had dropped 36 paise against the dollar to close at 60.40 on Wednesday.
Thursday, the rupee rose to 60.06 in the opening trade and declined to 60.18 against the dollar on the persistent concerns of higher global oil prices amid rising violence in Iraq, the second largest oil supplier to India. Brent crude hit a nine-month high near $115 a barrel on Thursday.
However, after the US Fed comments, the dollar weakness helped the rupee appreciate to 59.86 at the Interbank Foreign Exchange market.
Later it pared gains on continued oil price rise concerns and weaker domestic equity markets. BSE-benchmark Sensex ended at 25,201.80 points, weaker by 45 points (0.18 per cent) over the previous close.
Intraday, the rupee moved 32 paise in the range of 59.86 to 60.18 per dollar.
Call money rates, Bond yields rise
The overnight call money rate ended higher at 7.90 per cent from the previous close of 7.05 per cent on Wednesday. It moved in a range of 7.65 per cent to 8.35 per cent.
The 8.83 per cent benchmark bond maturing in 2023 fell to Rs 100.89 from 101.00, while its yield hardened a tad 8.68 per cent from Wednesday’s close of 8.67 per cent. Bond prices and yields move in the opposite directions.