The rupee resumed steady at 61.88 per dollar, but dropped immediately to 62.00 on good demand for the American currency from banks.
However, it recovered afterwards to trade at 61.91 per dollar at 1045 hrs in view of a recovery in the equity market.
The local unit moved in a range of 61.88-62.00 per dollar during morning deals.
In the New York market, the American currency rose against the Canadian dollar yesterday as a lack of major economic data turned the focus to a potential further reduction in monetary stimulus at the next Federal Reserve meeting.
Investors are also looking ahead to a monetary-policy decision from the Bank of Canada due today.
Meanwhile, the benchmark BSE Sensex rose by 47.03 points, or 0.22 per cent, to 21,298.15 at 1045 hrs.