The Indian rupee ended a four-day losing streak on Friday, closing at 94.21 against the US dollar.
The recovery was driven by a combination of modest foreign portfolio investment (FPI) inflows into local equities and a broader slide in the global dollar index, which reduced pressure on emerging market currencies.
Traders described the foreign investment activity as "mild" but sufficient to support the currency after a period of sustained selling.
The rupee's rebound marks a shift in sentiment, with market participants responding to improved liquidity conditions and a less aggressive US dollar benchmark.
This daily gain builds on a broader positive trend for the Indian currency.
The rupee recently secured its first quarterly appreciation in five periods, closing the previous quarter with a modest gain against the dollar at 94.66.