The beaten-down rupee today staged a good comeback, recuperating by a sharp 30 paise to end at 68.08 against the US currency on heavy bouts of dollar selling by banks and exporters with equities gaining ground.
A collective sigh of relief largely drove currency and financial markets, as sentiment somewhat stabilised slightly in Asia after an escalating trade threats between the worlds two biggest economies rattled investors' confidence overnight.
Besides, easing dollar pressures from importers and currency speculators in the midst of central bank intervention largely took the embattled currency sharply higher.
The home currency also regained strength against the euro, British pound and Japanese yen.
The Indian unit had tumbled to near one-month low of 68.38 on Tuesday on fears of knock-on effects from renewed trade tensions between the US and China.
Most Asian currencies also recouped most of their losses and were trading mixed.
The dollar is holding gains made over the previous session.
On the energy front, crude prices spiked to nearly USD 76 a barrel, recovering from day-earlier losses in Asia largely supported by a drop in US commercial crude inventories and the loss of storage capacity in oil producer Libya.
Brent crude futures, an international benchmark, is trading up at USD 75.05 a barrel in early Asian trade.
Meanwhile, bond markets continued its recovery momentum ahead of the minutes of the Reserve Bank of India's June policy meeting due later in the day.
The committee had, at its last meeting, unanimously raised interest rates by 0.25 per cent, citing rising inflation risks.
The 10-year benchmark bond yield fell sharply to end at 7.83 per cent from 7.86 per cent.
At the interbank foreign exchange (forex) market, the rupee opened with a gap up at 68.10 against 68.38 previously.
Maintaining its strong recovery trend, it touched a fresh session high of 68.03 in mid-afternoon deals before concluding at 68.08, showing a steep rise of 30 paise, or 0.44 per cent.
The RBI, meanwhile, fixed the reference rate for the dollar at 68.0838 and for the euro at 78.8274.
The dollar index, which measures the greenback's value against basket of six major currencies, was up at 94.66.
In the cross currency trade, the rupee edged higher against the pound sterling to finish at 89.72 per pound from 89.96 and rebounded against the euro to settle at 78.74 from 78.97.
It also bounced back against the Japanese yen to close at 61.87 per 100 yens as compared to 62.27 earlier.
Elsewhere, the common currency euro was trading little soft against the US dollar, continuing the downward trend as the European Central Bank (ECB) endorses a dovish outlook for monetary policy.
The British pound continued to trade near its 7-month low ahead of a crucial vote in the UK Parliament about an amendment to give a meaningful vote on Brexit.
In forward market today, premium for dollar displayed weak to steady trend due to lack of market moving factors.
The benchmark six-month forward premium payable in October eased to 103-105 paise from 104-106 paise, while the far-forward April 2019 contract held unchanged at 248-250 paise.