Early trading saw the rupee drop 4 paisas to 81.66 against the US dollar.
At the interbank foreign exchange, the rupee started out strongly against the dollar at 81.52, but later gave up its gains and dropped to 81.66, losing 4 paise from its previous level. The rupee also reached 81.51 versus the dollar during the first round of trading.
In early trade on Thursday, amid significant volatility, the rupee lost 4 paise to 81.66 against the US dollar as surging crude oil prices hurt the local currency.
At the interbank foreign exchange, the rupee started out strongly against the dollar at 81.52, but later gave up its gains and dropped to 81.66, losing 4 paise from its previous level.
The rupee also reached 81.51 versus the dollar during the opening of the business.
Due to Dussehra, the FX market was closed on Wednesday.
The rupee began the day stronger, tracking a decline in the value of the dollar during the previous two sessions, according to Sriram Iyer, a Senior Research Analyst at Reliance Securities. On Thursday morning, Asian and developing market peers were also firmer and provided assistance.
Iyer noted that the local unit was hurt by higher crude oil prices, hawkish comments from Fed officials, and JP Morgan's decision to delay the inclusion of Indian bonds in its global index.
The dollar index, which measures the dollar's value against a basket of six different currencies, fell 0.35 per cent to 110.81.
Brent crude futures, the global benchmark, rose 0.13 per cent to USD 93.49 per barrel.
The 30-share BSE Sensex was up 357.3 points, or 0.62 per cent, at 58,422.77 on the domestic equity market, while the larger NSE Nifty gained 109.25 points, or 0.63 per cent, to 17,387.5.
According to exchange data, foreign institutional investors were net purchasers on Tuesday, buying shares worth Rs 1,344.63 crore.