A late recovery in local stocks and minor fall in dollar against its major rival currencies in the overseas market capped the rupee's fall, forex dealers said.
At the Interbank Foreign Exchange (Forex) market, the domestic currency at 52.03/04 and dropped further to a low of 52.43 following weakness in equities.
In tune with a recovery in stocks, the rupee rebounded from the day's low and settled at 52.20/21, still down by 18 paise from its last close.
Meanwhile, the BSE benchmark index Sensex ended the day 115.12 points higher at 16,123.46 after registering a fall in early trade.
FIIs have withdrawn nearly $1.25 billion in 11 straight trading sessions since November 15.
Meanwhile, the rupee premium for the forward dollar inched up further on stray but sustained paying pressure from banks and corporates.
The benchmark six-month forward dollar premium payable in April edged up to 94-96 paise from 93-95 paise yesterday and far-forward contracts maturing in October also finished up at 155-157 paise from 154-1/2-156-1/2 paise previously.
The Reserve Bank of India has fixed the reference rate for the US dollar at Rs 52.1650 and for the euro at Rs 69.4735.
The rupee remained weak against the pound sterling to end at Rs 81.59/61 from Tuesday's close of Rs 81.28/30 while gained slightly to finish at 69.56/58 per euro from Rs 69.61/63 previously.
It also recovered against the Japanese yen to Rs 66.94/96 per 100 yen from last close of Rs 67.01/03.