The Indian rupee rose on Thursday, snapping three sessions of losses, on bunched up dollar sales by foreign banks after public holidays and inflows from a state-run utility.
The rupee was also helped by a slight recovery in the euro which halted a five-day losing streak, although the common currency looked vulnerable to concerns about slowing growth and uncertainty over aid for Greece and Spain.
However, the outlook for the rupee remains weak. The local unit fell in early session to as low as 55.08, close to its two month low of 55.12 hit on Monday, as concerns about slowing economic growth weigh on the currency.
Data on Wednesday showing headline inflation unexpectedly easing to 7.45 percent in October helped improve the mood somewhat, though it was still seen high enough to be a headache for policymakers struggling to balance the need for growth with taming prices.
"The euro zone worries will guide the dollar globally. I do not expect anything major on the domestic front. The current account deficit and IIP were dampeners but inflation was a pleasant surprise," said Hari Chandramgathan, a senior foreign exchange dealer with Federal Bank, referring to industrial output.