Despite a strong start, the home currency erased all its morning gains during intra-day due to renewed dollar demand from importers, but eventually managed to settled the day in positive zone.
The recovery move got an additional boost as risk sentiment improved significantly overnight after Chinese President Xi Jinping sent a conciliatory message of openness, reducing tensions around trade.
Global crude prices surged to near $70 a barrel, extending its overnight strong gains, as investors grew more optimistic that a trade dispute between the United States and China may be resolved without greater damage to the global economy amid growing concerns that Iran sanctions may be around the corner limiting global supply.
Brent crude, the international benchmark, is up 1.2 per cent to a one-week high of $69.49 a barrel in early Asian trade.
Rebounding from overnight slippage, the Indian unit opened higher at 64.87 as compared to Tuesday's close of 65.02 at the inter-bank foreign exchange (forex) market.
Maintaining its early recovery momentum, it surged through one-month peak during the early Asian session before retreating sharply.
After hitting a fresh intra-day low of 65.03 towards the fag-end trade, the rupee managed to pull back to end at 64.99, showing a modest gain of 3 paise, or 0.05 per cent.
The RBI, meanwhile, fixed the reference rate for the dollar at 64.9368 and for the euro at 79.9047.
The dollar index, which measures the greenback's value against a basket of six major currencies, was down at 89.33.
In the cross currency trade, however, the local unit dropped further against the pound sterling to finish at 92.14 from 91.76 and drifted against the euro to close at 80.41 from 79.81 on Monday.
The domestic unit also weakened against the Japanese yen to end at 60.76 per yens from 60.68 earlier.
Elsewhere, the pound sterling edged higher against the US dollar following positive comments from the Bank of England Monetary Policy Committee member that BoE shouldn't delay raising interest rates again, due to possibility of faster pay rises.
The common currency, euro however traded little changed amid relieving trade tensions.
In forward market today, premium for dollar remained weak owing to sustained receiving from exporters.
The benchmark six-month forward premium payable in August softened to 101-102 paise from 101-103 paise and the far-forward February 2019 contract also moved down to 222-223 paise from 222-224 paise previously.
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