Renewed selling of dollars by banks and exporters in view of sharp recovery in the equity market mainly boosted the rupee, a forex dealer said.
Meanwhile, the benchmark Sensex recovered sharply by 265.05 points, or 1.06%, to 25,296.37 at 1000 hours.
In New York, the US dollar fell against the Australian dollar on Monday after a better-than-expected reading on Chinese manufacturing showed a return to expansion.
The Chinese manufacturing sector swung into growth territory in June, with the "flash" version of HSBC's China manufacturing purchasing managers index jumping to 50.8 from 49.4 in May. That's the first time since December that the HSBI PMI reading was above 50, which divides contraction and expansion.