After a brief overnight fall, the rupee gained ground against the dollar and ended higher by 5 paise at 66.97 on improvement in trade deficit data and easing fears of rate hike by the US Federal Reserve.
The rupee gave up its initial strong gains to trade weak briefly after dollar attracted strong demand from importers for settlement purposes.
Buoyancy in domestic equity markets alongside robust capital flows predominantly helped the local unit to regain its strength after overcoming initial volatility.
Weakness in the green back overseas against the backdrop of sluggish US macro data outcome also helped the home currency move higher.
Conflicting signals from Fed officials on interest rates largely kept forex market highly volatile in recent past, a forex dealer commented.
The rupee opened on a firm footing at 66.86 from Thursday’s closing value of 67.02 at the Interbank Foreign Exchange (forex) market and firmed up further to 66.84 on fresh bouts of dollar selling by exporters.
However, a sudden bouts of dollar demand spill-over immediately reversed the strong recovery momentum and drifted sharply to hit a intra-day low of 67.03 in slightly nervous trade before rebounding to end at 66.97, showing a gain of five paise, or 0.07 per cent.
It settled below the psychological 67-mark, falling 13 paise to hit over two-week low of 67.02 yesterday.