At the Interbank Foreign Exchange (Forex) market, the domestic unit commenced slightly lower at 61.96 a dollar from previous close of 61.94.
It traded in a narrow range of 61.90 and 62.06 before concluding at 61.98, down 4 paise from its last close.
In the previous three days, the rupee had jumped 29 paise or 0.47 per cent.
"It was a mixed session for the rupee, as locally and globally there was absence of cues. Positive closing of the stock markets and weak dollar index is seen consistently supporting the rupee," said Abhishek Goenka, Founder & CEO of India Forex Advisors.
Month-end dollar demand from importers, including oil firms, however, was seen putting pressure on the Indian rupee, he added.
The US dollar index was up by a modest 0.04 per cent against its major global rivals.
Pramit Brahmbhatt, CEO, Alpari Financial Services, (India), said: "After strengthening for three consecutive days, today Indian rupee depreciated against the US currency on renewed dollar demand from importers and banks though the fall
was capped by the strong local equity markets."
The BSE Sensex today spurted by 134.52 points or 0.65 per cent. FIIs picked up shares worth Rs 423.41 crore yesterday, as per provisional data with stock exchanges.
Forward dollar premium softened on stray receipts from exporters. The benchmark six-month premium payable in July declined to 224.5-226.5 paise from 227-229 paise.
Far forward contracts maturing in January 2015 eased to 471-473 paise from 471.5-473.5 paise previously.
The RBI fixed the reference rate for dollar at 61.97 and for the euro at 85.14.
The Indian rupee fell against the pound to 103.37 from 103.30, while recovered to 85.14 per euro from 85.29. It also regained to 60.52 per 100 Japanese yen from 60.64.