Healthy foreign fund inflows from backed by a weak dollar against other currencies largely supported the rupee.
India's economy grew 7.1 per cent in April-June mainly on subdued performance of mining, construction and farm sectors, as against 7.9 per cent in the January-March period of last fiscal year.
The rupee resumed lower at 67.05 compared with its overnight closing value of 66.96 at the interbank foreign exchange (forex) market and softened further to 67.07 due to mild dollar demand from state-run banks.
However, fresh dollar unwinding by speculative traders ahead of key US macro data helped domestic unit to rebound smartly to hit a intraday high of 66.93 before settling at 66.95, showing a mere gain of one paisa.
It has gained 23 paise in three days to Thursday.
In worldwide trade, US dollar traded marginally weak against its major trading parters ahead of much-awaited official US jobs data.
Foreign portfolio investors (FPIs) bought shares worth a net Rs 854.19 crore yesterday, provisional data released by stock exchanges showed.
The Reserve Bank of India fixed the reference rate for the dollar at 66.9539 and for the euro at 74.6603.
In cross-currency trades, the rupee dropped further against the pound sterling to end at 88.66 from 87.93 and fell back against the euro to finish at 74.64 from 74.55 earlier.
Gaining some ground, it recovered sharply against the Japanese yen to close at 64.59 compared to 66.78 per 100 yens the previous day.
Meanwhile, equity markets succumbed to profit-taking after a three-day massive surge and ended broadly lower due to heavy selling in telecom stocks amid sluggish growth data.
The BSE Sensex dropped by 28.69 points to settle at 28,423.48, while the broader Nifty moved down 11.55 points to 8,774.65.
In the forward market, premium for dollar continued to slide due to consistent receipts by exporters.
The benchmark six-month premium for February drifted to 185.5-187.5 paise from 189.5-191.5 paise and the forward August 2017 contract also fell to 376.5-378.5 paise from 383.5-385.5 paise on Wednesday.
Crude prices traded marginally lower after data from the US showed inventories had risen more than expected despite an upcoming OPEC (Organization of Petroleum Exporting Countries) meet on production cut.