The rupee darted up 14 paise to finish at 68.44 against the US dollar on Thursday after dovish comments by US Federal Reserve chair Jerome Powell boosted emerging market currencies.
However, firming oil prices capped the gains, traders said.
At the interbank foreign exchange market, the local unit opened on a firm footing at 68.31, and shuttled between a high of 68.30 and a low of 68.48 during the day. The rupee finally closed at 68.44, down 14 paise over its previous close.
The rupee had declined by 7 paise to close at 68.58 against the greenback Wednesday, pressured by persistent foreign fund outflows and firming crude oil prices.