The rupee was trading strong at 67.79 in the evening session due to mild dollar selling by banks and importers.
According to forex dealers, dollar remaining weak against other currencies overseas also supported the rupee sentiment.
But capital outflows from the domestic equity market restricted the rupee's gains.
The rupee opened flat at 67.82 per dollar at the Interbank Foreign Exchange (Forex) market. The domestic unit hovered between 67.85 and 67.78 per dollar during evening deals before trading at 66.79, up 3 paise at 3.50 pm local time.
Forex dealers said that the rupee is expected to trade sideways with negative bias in the absence of any major cues.
Meanwhile, the 30-share BSE index Sensex ended down by 233.60 points or 0.9 per cent at 25,807.10.
Overseas, the dollar dipped against the yen early today, edging lower after US Treasury yields fell on mixed economic data. Trading was subdued as many key markets remained closed today for the Christmas holidays.
Crude prices hold steady as the market waits to see how OPEC would manage its planned output cuts with Libya expecting to boost production.