Rupee gained further by 11 paise to 66.10 per dollar against the US currency in late morning deals following sustained bouts of dollar selling by banks and exporters amid bearish dollar overseas.
The rupee resumed marginally lower by 4 paise at 66.25 per dollar against yesterday's level of 66.21 at the Inter-bank Foreign Exchange (Forex) market.
It hovered in a range of 66.27 and 66.07 during the morning deals before quoting 66.10 per dollar at 1030 hrs.
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The dollar index was down 0.03 per cent at 94.54 as against a basket of six currencies in the early trade.
At the overseas, the dollar was on the defensive early today, nursing deep losses against the euro and yen after Friday's firm US jobs report failed to shift a broadly held view that the Federal Reserve will remain cautious on raising interest rates this year.
Oil prices tumbled further in Asia on dwindling hopes that key producers will reach an agreement to freeze output when they meet this month to discuss a global supply glut.
Meanwhile, the benchmark BSE Sensex was trading down by 134.41 points or 0.53 per cent at 25,265.24 at 1030 hrs.
Sterling GBPUSD, -1.1589 pct, slumped to an intraday low
of USD 1.3114, a new post-Brexit low and the weakest against the dollar since 1985. The UK currency traded at USD 1.3289 late Monday in New York.
Pramit Brahmbhatt of Veracity Financial Services said, "The rupee opened marginally lower by losing 5 paise at 67.32/USD against previous close of 67.27/USD, as at lower levels dollar found buying interest. Our benchmark index NIFTY opened marginally higher but found selling pressure at higher level and closed with a loss of 35 points.
"Negative cues from domestic equity market put pressure on rupee. Thus the rupee closed with a loss of 18 paise at 67.45/ USD. Trading range for the spot USD/INR pair will be 67.20 to 67.80/USD."
In forward market, premium for dollar eased further on persistent receivings from exporters.
The benchmark six-month premium for December moved down further to 198-200 paise from 200-201 paise yesterday while forward June 2017 contract also declined to 396-398 from 399.75-400.50 paise.
Meanwhile, the benchmark Sensex dropped by 111.89 points or 0.41 pct to close at 27,166.87 today.
Note: The Forex and Money markets will remain closed tomorrow, July 6, on account of "Ramzan Id".
