The rupee rebounded from its all-time low to close 5 paise higher at 78.98 (provisional) against the US dollar on Thursday.
At the interbank forex market, the local unit opened at 78.92 against the greenback and witnessed an intra-day high of 78.90 and a low of 78.99.
It finally settled at 78.98, a rise of 5 paise over its previous close.
The rupee had breached the psychologically significant level of 79 per dollar level for the first time ever on Wednesday and has also hit a series of lifetime lows this month.
"The near-term outlook remains bearish for the rupee amid foreign fund outflows and risk-averse moods. Spot USD-INR is having support at 78.38 and resistance at 79.10.
"Looking at the past few days’ price action, we could see profit booking in the pair before heading higher towards 79.10," said Dilip Parmar, Research Analyst, HDFC Securities.
The dollar index, which measures the greenback's strength against a basket of six currencies, was up 0.06 per cent at 105.16.
Brent crude futures, the global oil benchmark, fell 0.17 per cent to $116.06 per barrel.
Foreign institutional investors remained net sellers in the capital market on Wednesday as they offloaded shares worth ₹851.06 crore, as per exchange data.