The rupee, which rose to a high of 62.95, gained for the second day after RBI governor Raghuram Rajan sought to reassure investors, saying there is no fundamental reason for the currency to fall again. He also pegged the CAD at a lower level than estimated earlier.
Capital inflows continued to aid the rupees rise, although a strong dollar overseas capped the gains.
The rupee resumed higher at 63.15 a dollar from the previous close of 63.30 at the interbank foreign exchange market and improved to a high of 62.95 as local stocks rose.
Further gains were stalled by concerns about a possible rate hike after data showed wholesale price inflation at 7% in October compared with 6.46% in September.
The rupee dropped to a low of 63.34 and closed at 63.12, a rise of 19 paise or 0.30%. On Wednesday, it had gained 41 paise. The local currency fell for the fifth straight week, losing 64 paise.
The 30-share benchmark Sensex snapped a seven-day losing streak and advanced 205.02 points or 1.02%.