In lack lustre trade at the Interbank Foreign Exchange (Forex) market, the Indian unit opened lower at 39.46/47 a dollar from yesterday's close of 39.4150/4250 per dollar.
Later, it recovered moderately to quote at 39.4450/4550 a dollar in late morning deals, but still lower than previous day's close.
There was some dollar buying from banks on behalf of oil refiners to meet their month-end dollar demand as the global crude oil once again crossed USD 97 a barrel in New York yesterday.
Dealers attributed lacklustre activity in the exchange market to steady trend in the equity markets in Asia due to Christmas holidays.
The benchmark Sensex was down by nearly 41 points at 10.30 am today.
Meanwhile, the dollar declined sharply against its major rivals Thursday in New York in the wake of the assassination of Pakistan's former Prime Minister and disappointing US economic data.