Extending gains for the second straight day, the rupee strengthened by 16 paise to close at 67.52 against the US currency on persistent dollar selling by banks and exporters amid firm stock markets.
Dollar selling on hopes of more foreign funds inflows into equity market supported the rupee rise, dealers said.
Also a weak dollar overseas supported the rupee sentiment, they added.
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Surging off the Brexit blues, stock markets returned to normal on persistent buying pressure with the benchmark BSE Sensex rallying by 259 points to close at 26,999.72 in view of various positive factors.
As per provisional exchange data, foreign investors put in net Rs 1,107.42 crore in equities on Thursday.
The rupee opened sharply higher 67.55 per dollar against yesterday’s closing level of 67.68 per dollar at the Interbank Foreign Exchange (Forex) market.
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It hovered in a range of 67.4750 and 67.72 per dollar before ending at 67.52 per dollar, showing a gain of 16 paise or 0.24 per cent. The rupee had gained by 43 paise or 0.63 per cent in two days.
Meanwhile, the dollar index fell by 0.21 pct against a basket of six currencies in the late evening trade.
The RBI fixed the reference rate for the dollar at 67.6166 and euro at 75.0071.
In cross-currency trades, the rupee recovered against the pound sterling to finish at 90.87 from 90.90 yesterday while the dropped against the euro to 75.19 from 74.96.
The domestic currency also moved up further against the Japanese yen to 65.68 per 100 yens from 65.97.
At overseas, the British pound traded higher for a third session today as fading fears over Brexit heightened investors’ appetite for what are typically riskier assets.
In forward market, premium for dollars declined on good receivings from exporters.
The benchmark six—month premium for November declined to 170.5—172.5 paise from 174—176 paise yesterday and forward May 2017 contract also moved down to 367.5—369.5 pasie from 369—371 paise.