The rupee appreciated for the second day, adding nine paise to end at a one-week high of 61.95 against the dollar on Monday after exporters sold the US currency, which weakened overseas.
The rupee also got support from positive local equities and capital inflows.
At the interbank foreign exchange market, the rupee opened a tad lower at 62.05 a dollar from last Friday’s close of 62.04. It moved in a range of 61.8350 to 62.07 before ending above the 62 mark at 61.95, a gain of nine paise or 0.15 per cent.
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The rupee was at the highest level since closing at 61.73 on December 16.
The benchmark 30-share S&P BSE Sensex on Monday gained 21.31 points. Foreign institutional investors bought a net Rs 990.19 crore of shares last Friday, according to provisional data with the stock exchanges.
The dollar index, which tracks the US currency against a basket of six major global rivals, was down 0.10 per cent.
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“The dollar index...is trading weak for the second consecutive day, which helped the rupee to trade strong,” said Pramit Brahmbhatt, CEO of Alpari Financial Services (India).
Forward dollar premiums remained weak on continued receipts by exporters.
The RBI fixed the reference rate for the dollar at 61.9915 and for the euro at 84.8180.
The rupee inched up to 101.32 against the pound from 101.34 on Friday. It fell back to 84.75 against the euro from 84.70 and dropped to 59.66 per 100 Japanese yen from 59.41.