The rupee appreciated 12 paise to close at 83.19 (provisional) against the U.S. dollar on April 10, as equity benchmarks climbing to all-time high levels and a weak greenback against major currencies overseas boosted investor sentiment.
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Forex traders said the rising appetite for riskier assets supported the local currency.
At the interbank foreign exchange market, the local unit opened at 83.23 against the greenback. The unit hit an intraday high of 83.15.
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The domestic unit finally settled at 83.19 (provisional) against the dollar, 12 paise higher from its previous close.
On Monday, the rupee settled flat at 83.31 against the US dollar.
Forex and money markets were closed on Tuesday on account of 'Gudhipadwa'.
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"We expect the rupee to trade with a slight positive bias on positive tone in the domestic markets and some softness in the US Dollar. The easing of crude oil prices from higher levels may also support the domestic currency.
"However, any re-escalation of tensions in the Middle East may cap the upside. Traders may remain cautious ahead of inflation data and FOMC meeting minutes from the US. A hot inflation data may lead to a bounce back in the US dollar while softening of inflation may ease the greenback further," said Anuj Choudhary Research Analyst, Sharekhan by BNP Paribas.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.09% lower at 104.05.
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Brent crude futures, the global oil benchmark, rose 0.31% to $89.70 per barrel.
On the domestic equity market front, the Sensex climbed 354.45 points to settle above the 75,000 mark for first time, and the Nifty jumped 111.05 points to record 22,753.80.
Foreign Institutional Investors (FIIs) were net sellers in the capital markets on Tuesday as they offloaded shares worth ₹593.20 crore, according to exchange data.