Mumbai: On the back of a rebound in equity markets, the Indian rupee recovered by almost 30 paise Thursday from the previous day's record intra-day low of 54.52 against the dollar due to selling of the American currency by banks.

The rupee rose to 54.20 against a US dollar in late morning trade.

The rupee had hit a record low of 54.52 against a dollar Wednesday due to risk aversion in global markets and rising concerns over widening current account and fiscal deficit.

Weak economic growth outlook and high inflation has also been putting pressure on the Indian currency.

The partially convertible rupee had also hit a record closing low of 54.49 against a dollar Wednesday.

The rupee gained some ground taking cues from rebound in the stock markets.

The benchmark Sensex of the Bombay Stock Exchange was trading 0.50 percent higher at 16,109.85 points in the afternoon session Thursday after slumping below the psychological resistance level of 16,000-point mark in the intra-day Wednesday.

The wide-based Nifty of the National Stock Exchange was also ruling 0.52 percent higher at 4,883.70 points.

The markets have recovered a day after Finance Minister Pranab Mukherjee said the government was planning to introduce fresh austerity measures to ensure fiscal consolidation.