The rupee fell to as low as 61.71 after the RBI policy review before gaining to trade at 61.59.
The rupee/dollar pair closed Monday at 61.53/54.
The RBI kept its key policy repo rate unchanged at 8% on Tuesday.
The dollar is on track to post its biggest monthly gain in over a year.
Asian currencies are trading mixed versus the dollar.
Month-end demand from importers is seen aiding the pair.
Nifty is trading up 0.87%.
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