The rupee had closed at 61.4950/5050 on Wednesday. Traders cite modest RBI intervention to defend the rupee via state-run lenders.
That marks a changed stance from not long ago when the RBI was buying dollars.
Dealers say foreign custodian banks buying dollars for offshore clients trimming exposure to India.
Indian rupee recovers against the US dollar, trades at 61.28 in morning trade
The Indian rupee recovered by 21 paise to 61.28 against the US currency in morning trade today on fresh selling of US dollars by banks and exporters in view of good foreign capital inflows into equity market.
The rupee resumed higher at 61.37 per dollar as against the last closing level of 61.49 at the Interbank Foreign Exchange (Forex) Market.
It firmed up further to 61.27 before quoting at 61.28 per dollar at 1000 hours.
The domestic unit moved in a range of 61.27 and 61.39 per dollar during the morning trade.
Banks and exporters preferred to reduce their dollar position on the back of good foreign capital inflows, a forex dealer said.
Foreign portfolio investors (FPIs) bought shares worth a net Rs 283.87 crore yesterday, as per provisional data from the stock exchanges.
However, in New York market, the euro fell to its lowest point against the dollar in nine months as Italy, the euro zone's fourth-largest economy, slipped into a recession and Russia appeared closer than ever to invading Ukraine.