The Indian rupee pared early gains and ended 10 paise stronger at 48.44/45 against the dollar on Tuesday, moving in tandem with local stocks as the US currency improved against major world counterparts.
The dollar was marginally higher against the euro in early trade on the London exchange amid fresh worries that the global economy might take more time for recovery than anticipated.
The Interbank Foreign Exchange market witnessed active trade during the day as the domestic currency moved in a range of 48.28 and 48.75 after resuming firm at 48.40/42 a dollar from its last close of 48.54/56 a dollar.
Forex dealers credited the rupee's recovery to a bounce in local stocks after it plunged by a huge 870 points or six per cent yesterday.
The rupee, however, trimmed its gains in the later part of the day as the dollar turned stronger against a basket of currencies in overseas markets.
Capital outflows yesterday also remained a cause for concern in the exchange market.
The Indian benchmark Sensex today ended up 127 points or 0.90 per cent on the back of encouraging global cues.
Global oil prices also hovered above $64 a barrel in Asian trade.