The rupee rebounded on Thursday, helped by foreign fund inflows into local shares and a distinct easing in importer demand for dollars, as the euro recovered some ground against the US currency overseas. The rupee closed at 43.5800/5850 per dollar, 0.17 percent stronger than Wednesday's 43.6525/6575 close.
"At the moment a lot of big corporates in our market are clearly more in favour of the rupee and so whichever major currency is doing better against the dollar becomes a trigger to sell (dollars)," a chief dealer at a North American bank said.
"Initially, it was sterling's gains against the dollar and later once the euro rose above $1.21 then that became the reason to sell. Tomorrow, if the dollar slips overseas against the yen or sterling or euro we should the rupee opening stronger."
The euro fetched about $1.2130, up from Wednesday's nine-month low of $1.2015 even as European Union leaders gathered to broker a budget deal and salvage the EU constitution after rejection by French and Dutch voters.
The dollar is, however, still about 10 percent up against the euro this year, riding on favourable yield differentials and boosted by expectations that US rates will rise further.