The rupee appreciated by 6 paise to close at 73.49 (provisional) against the U.S. dollar on Monday, tracking weakness in the American currency and positive domestic equities.
The sustained foreign fund inflows also supported the rupee, traders said.
At the interbank forex market, the domestic unit opened at 73.52 against the U.S. dollar and witnessed an intra-day high of 73.47 and a low of 73.61.
The local unit finally settled at 73.49 against the American currency, registering a rise of 6 paise over its previous close.
On Thursday, the rupee had settled at 73.55 against the U.S. dollar.
Forex and equity markets were closed on Friday for Christmas.
Meanwhile, the dollar index, which gauges the greenback''s strength against a basket of six currencies, slipped 0.25% to 89.99.
On the domestic equity market front, BSE Sensex ended 380.21 points or 0.81% higher at 47,353.75, while the broader NSE Nifty jumped 123.95 points or 0.9% to 13,873.20.
"Indian Rupee appreciated on weakness in Dollar and surge in stock markets. Market sentiments improved as U.S. President Donald Trump signed $2.3 trillion coronavirus relief aid and spending package and as the U.K. and European Union secured trade agreement," Saif Mukadam, Research Analyst, Sharekhan by BNP Paribas, said.
However, the sharp gain was prevented amid worries over rising coronavirus cases across the globe and emergence of a new strain of COVID-19 in the U.K., Mr. Mukadam added.
Traders fear that strict restrictions on social and business activity would hamper global economic recovery.
Foreign institutional investors were net buyers in the capital market as they purchased shares worth ₹1,225.69 crore on a net basis on Thursday, according to provisional exchange data.
Brent crude futures, the global oil benchmark, rose 1.31% to $51.96 per barrel.
