In two-way movement, the rupee on Tuesday recovered its overnight losses and ended slightly up at 40.83/84 against the US currency on fresh dollar selling amid weak dollar overseas.

In a volatile trade at the Interbank Foreign Exchange (Forex) market, the rupee opened moderately higher at 40.85/87 a dollar from previous close of 40.87/89 a dollar and improved further to Rs 40.73 on lack of any intervention by the central bank.

Weak dollar overseas also boosted the rupee sentiment. In New York, the dollar remained persistently weaker against its major rivals in a lacklustre trading and caged in narrow ranges on Monday.

On Monday, the rupee had touched a fresh nine-year high of 40.53 a dollar.

However, dollar buying by some oil refinery companies and importers weighed on the rupee and it fell back to a low of 40.88 a dollar before ending at 40.83/84.

Persistent fears of intervention by the Reserve Bank of India (RBI) at any time to prevent the exporters' competitiveness also forced traders to cover part of their short dollar positions at every rupee rise. Appreciating rupee is hurting export-driven industries in a big way.

Analysts attributed initial sharp rally in the rupee to heavy selling dollars by some banks and exporters.

The rupee also gained on expectation of sustained capital inflows into the fast-growing economy after announcement of strong quarter four results by major corporates.

Meanwhile, global crude oil remained just above USD 61 a barrel in Asian trade today.

The RBI on Tuesday fixed the reference rate for the US currency at Rs 40.78 per dollar and for the single european unit at Rs 55.53 per euro.

The rupee premiums on forward dollar ended higher due to fresh paying pressure from banks and corporates.

Benchmark six-month forward dollar premiums payable in October ended at 108 - 110 paise, up from 102 - 104 paise on Monday and the far-forwards maturing in April closed higher at 188 - 190 paise from 178 - 181 paise previously.

In cross currency trades, the rupee recovered against the British Sterling and the Euro while moved down further against the Jananese Yen.

The Indian unit recouped against the sterling to close at Rs 81.36/38 per pound from overnight close of Rs 81.57/59 per pound and also firmed up against the single european currency to Rs 55.36/38 per euro from previous close of Rs 55.64/66 per euro.

The rupee, however, softened further against the Japanese unit to end at Rs 34.12/14 per 100 yen from last close of Rs 34.08/10 per 100 yen.