Traders expect the currency to remain range-bound in the near-term in the absence of any major domestic or global triggers.
The December quarter growth data due to be released on Friday after market close will be the next key factor for markets.
India's economic growth likely slowed to a near decade-low at the end of last year as high interest rates hit factory activity, according to economists polled by Reuters who don't expect a pickup in investment before elections in May.
The rupee is likely to hold in a 61.70 to 62.80 per dollar range until the end of the week, dealers said.
"Spot has remained in a tight range as a large state-run bank keeps bidding and absorbs the supplies," said Paresh Nayar, head of foreign exchange and fixed income trading at First Rand Bank.
Traders speculate that inflows from an offshore bond sale by Indian Railway Finance Corp, which raised $500 million, has been helping the rupee in recent sessions.
The partially convertible rupee closed at 61.98/99 per dollar compared with its close of 61.9350/9450 on Tuesday. Financial markets will remain closed on Thursday for a local holiday, trading resumes on Friday.
Gains in the domestic sharemarket helped limit a further downside to the rupee.
Shares rose for a fourth straight session to close at their highest in more than a month as blue chips such as ITC Ltd rose on heavy buying by foreign investors despite expectations of volatility due to derivatives expiry.
In the offshore non-deliverable forwards, the one-month contract was at 62.29, while the three-month was at 63.05.