The rupee dropped 14 paise to 62.28 against the American currency in the late morning trade on good demand for dollar from banks and importers on the back of its firmness in overseas markets.
However, persistent foreign capital inflows into India's equity market restricted the rupee's fall, a forex dealer said.
The domestic unit resumed lower at 62.40 per dollar as against the last closing level of 62.14 at the Interbank Foreign Exchange (Forex) market. It recovered afterwards to 62.24 per dollar before quoting at 62.28 at 1040hrs.
The Indian unit hovered in a range of 62.24-62.40 per dollar during the late morning deals.
In New York market, the greenback rose broadly yesterday, propelled by the Federal ReserveŅs long-awaited decision to slow its monetary stimulus.
The Fed said Wednesday it would cut the size of its monthly asset purchases by USD 10 billion to USD 75 billion a month, beginning in January.
The US central bank tempered its announcement by emphasising that interest rates would remain low "well past" the time that the unemployment rate falls below its 6.5 pct threshold, emphasising that tapering isn't liquidity tightening.
Meanwhile, the BSE benchmark Sensex rose 91.49 points, or 0.44 per cent, to 20,800.11 at 1045 hrs.