Mumbai, Jan 18 (Agencies): The Indian rupee on Tuesday snapped out of its three-day losing spree and recovered by ten paise to close at Rs 45.42/43 a dollar, following smart rally in local equities and a sluggish dollar overseas.

Fresh dollar selling by exporters and some banks further boosted the rupee.

At the Interbank Foreign Exchange (Forex) market, the domestic unit that opened near the on Monday’s close at 45.53/54 a dollar, soon after dipped to the day's low of Rs 45.57 against the US currency. The rupee has depreciated by 39 paise or 0.86 per cent in the last three day trading sessions.

However, rallying stock market lifted the rupee up to Rs 45.40 a dollar before settling at 45.42/43 against the US dollar. The Indian benchmark Sensex today closed 209.80 points or 1.11 per cent higher while other Asian markets observed a mixed trend.

The dollar index, consisting of six major currencies, was down by nearly 0.6 per cent to nearly 8-week low in London Tuesday following rise in the euro on hopes for improvement in the euro zone debt.

However, the rise in the rupee was capped by sustained selling by Foreign Institutional Investors (FIIs), who pulled out USD 990.55 million from equities in nine sessions since January 5.