Besides, RBI's decision to inject Rs 12,000 crore liquidity into the system through the purchase of government bonds on October 11 to meet the festival season demand for funds also supported the recovery in rupee, dealers said.
A higher opening of domestic equity markets too aided the recovery in the domestic unit.
The benchmark BSE Sensex rose 110.20 points or 0.31 per cent, to 34,409.67 in opening trade.
Meanwhile, DIIs bought shares worth Rs 1,526 crore, while FIIs pulled out a net Rs 1,242 crore Tuesday, as per provisional stock exchange data.
(With inputs from agencies.)