The Indian currency appreciated by nearly 30 paise to 81.42 against the greenback at the end of trading hours on Wednesday.
It closed at 81.72 on Tuesday.
The local currency opened at 81.63, appreciating 9 paise against Monday's close of 81.72.
During morning trade, the rupee appreciated 0.21% to 81.55.
"A brief period of upsides failed to gather momentum, resigning the dollar-rupee within the 81.70-81.53 band," said Anand James, chief market strategist at Geojit Financial Services. "We may have to let go of the upside expectations if the dollar-rupee prefers the 81.6-81.53 vicinity early in the day, but will play a collapse only once below 81.35."
At 10:25 a.m., the rupee traded at 81.61.
The rupee had hit a record low of 83.29 on Oct. 20.
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