The rupee is off lows, which dealers attribute to dollar selling from state-run, foreign banks. The rupee is at 62.27/28, down from an intraday low of 62.48. The unit had closed at 62.09/10 on 18 December.
Dealers say the impact of $10 billion a month taper by the Federal Reserve largely priced in.
Some say selling by state-run banks may be related to the Reserve Bank of India. However, others say it could be bunched-up inflows due to strike on Wednesday when most state-run banks were thinly staffed.
"There has been some gains in crosses such as euro and also the fixing is over," says a dealer, justifying the rupee recovery.