Paring initial losses, the rupee recovered to close at 55.57 against the dollar on the back of stronger domestic equity markets. The Indian unit had closed weaker by at a six-month low of 55.64 on Friday.
On Monday, the unit opened weaker at 55.70 and later edged down to a low of 55.76 per dollar due to month-end demand for the American currency from oil importers.
Further, dollar strengthening against the euro and other overseas currencies in the global market put pressure on the rupee.
However, the capital inflows into the equity markets limited the fall in the rupee and it recovered to 55.52 at the Interbank Foreign Exchange Market.
The BSE-benchmark Sensex ended higher by 326 points (up 1.66 per cent) at 20,030.77 points.
Later, mild dollar demand weakened the rupee towards its close. Month-end demand for the greenback will continue to weigh on the Indian currency.
