The rupee recovered on Friday and closed 31 paise higher at 61.85 against the dollar after a rally in stock markets and fresh sales of the U.S. currency by exporters.
A sharp fall in the dollar overseas and continued capital inflows also boosted the rupee. The dollar index, which tracks the performance of the U.S. currency against six major global rivals, was down 0.62 per cent.
At the inter-bank foreign exchange market, the rupee opened strong at 61.97 a dollar from the previous close of 62.16. It fell to a low of 62.16 on month-end dollar demand from importers, mainly oil refiners.
The rupee bounced back to a high of 61.8325 before ending at 61.85, a rise of 31 paise. On Thursday, it had dipped 37 paise.