The domestic unit opened at a stronger margin of 41.83/85 this morning but later registered an intra-day's low of 42.00, traders said.
However, it was seen nowhere around the record nine-year high of 41.62 which was reached yesterday and a strongest since May, 1998.
Strong demand for dollars from importers kept a lid on the Rupee's gains, as did the prospect of renewed central bank intervention.
At 1010 hrs, the partially convertible rupee was at 41.90/92 per dollar. The Indian unit is currently trading at 41.90/92.
The Reserve Bank of India bought a record USD 11.9 billion in February in a bid to stem the Rupee's rise.
The Rupee has gained about 12 per cent since it hit a three-year low in July 2006, and traders think the central bank is uncomfortable with its pace of appreciation.
Meanwhile, investment inflows remained healthy in a steady trickle.
The Rupee gave up all the day's gains while continuing to bob around in a wide range before a final round of dollar short covering pushed it down to 42.00.
Forward premia were steered in either direction by spot market volatility. Nine-month premia ended the day higher while the other segments slipped after rising as much as 7 paise intra-day.