The rupee weakened to 65.00 due to month-end dollar demand from importers. However, the domestic unit's losses were capped as the dollar remained weak against other currencies overseas.
The rupee opened higher by 9 paise at a four-week high of 64.78 against the US dollar as bond yields fell 25 basis points after the government announced lower-than-expected borrowing plan for the first half of FY19.
It hovered in a range of 65 and 64.72 before ending the session at 64.96, down 9 paise at 5 pm local time.
The government said it will borrow Rs 2.88 lakh crore in the April-September period of 2018-19, lower than Rs 3.72 lakh crore it had borrowed in the first half of the current fiscal, and introduce bonds linked to CPI or retail inflation.
Yesterday, the rupee had gained 14 paise to end at a near two-week high of 64.87 against the US currency on sustained dollar unwinding by exporters and banks.
Meanwhile, the S&P BSE Sensex ended higher by 107.98 points or 0.33 per cent at 33,174.39 and the Nifty50 closed up 53.50 points or 0.53 per cent at 10,184.15.
The euro rose to a new five-week high on Tuesday with receding fears of a global trade war hurting the dollar and encouraging investors to resume their bets on a stronger single currency.