The showed some recovery and traded 5 paise higher at 88.64 against the dollar in early trade on Friday, tracking lower crude oil prices and weaker American currency.
According to forex traders, the outflow of foreign funds amid selling pressure in the equity markets prevented a sharp gain in the domestic unit.
At the interbank foreign exchange, the rupee opened at 88.60 rose slightly to 88.59 before trading at 88.64 against the greenback, up 5 paise from its previous close.
On Thursday, the rupee had crashed 47 paise to settle at 88.69 against the after the US Federal Reserve reduced interest rates by 25 basis points, in line with expectations.
However, Fed Chair Jerome Powell flagged US inflation staying above target level and uncertainties in the labour market, trimming hope for a further rate cut in December policy.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, fell 0.02 per cent to 99.33.
Brent crude, the global oil benchmark, fell 0.68 per cent to $64.56 per barrel in futures trading. On the domestic equity market front, Sensex climbed 192.31 points or 0.23 per cent to 84,596.77 in early trade, while the Nifty gained 42.05 points or 0.16 per cent to 25,919.90.
sold equities worth ₹3,077.59 crore on Thursday, according to exchange data.