The rupee erased its early gains to trade down by 5 paise at 63.96 against the US currency in afternoon trade in line with losses in stock markets.
The rupee opened higher at 63.87 per dollar as against previous close of 63.91 at the inter-bank foreign exchange here.
It gained further to 63.81 on good bouts of dollar selling before quoting at 63.84 at 1030 hrs.
However, the rupee gave most of its gains in afternoon trade to quote at 63.96, down by 5 paise, as stock markets lost steam.
Meanwhile, the US dollar slipped to a three-year low against a basket of currencies in early Asian trade, headed for its biggest weekly loss in two years.
The 30-share BSE Sensex trading flat, down by 80.73 points or 0.24 per cent at 34,216.74 at 1300hrs.