The rupee pared its initial losses to settle higher by 9 paise at 72.65 (provisional) against the US dollar on Thursday following losses in the American currency in the global markets.
At the interbank foreign exchange market, the domestic unit opened lower at 72.76 tracking selloff in domestic equities. The rupee touched a low of 72.78 and a high of 72.65 during the day.
The domestic unit finally ended 9 paise higher at 72.65 against the US dollar. On Wednesday, the rupee had settled at 72.74 against the American currency.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, fell 0.26 per cent to 90.71.
"The rising yields are putting positive pressure on dollar index and in turn on USDINR spot, but the uptrend will be limited as traders need more proof that the US economy is getting in better conditions," said Rahul Gupta, Head Of Research-Currency, Emkay Global Financial Services.
Gupta added that the optimism over additional stimulus will keep the spot below the psychological level of 73 zone. "However, RBI intervention will be eyed. We expect the trading range to be in between 72.40-73."
On the domestic equity market front, the BSE Sensex tumbled 379.14 points or 0.73 per cent to end at 51,324.69 while the NSE Nifty fell 89.95 points or 0.59 per cent to 15,118.95.
Foreign institutional investors were net buyers in the capital market as they purchased shares worth Rs 1,008.20 crore on Wednesday, according to exchange data.
Brent crude futures, the global oil benchmark, advanced 0.28 per cent to USD 64.52 per barrel.
