In line with the recovery in local equities, the Indian rupee washed out early losses on Wednesday and closed up by seven paise at over two-week high of 60.06 against the greenback.
Fresh dollar selling by exporters too aided the rupee rise while a firm dollar overseas capped the rupee rise.
FIIs had injected Rs. 75.04 crore on Monday. The dollar index was up by 0.11% ahead of data expected to show growth in the US economy, and the outcome of the Federal Reserve's two-day policy meeting which concludes later today.
At the Interbank Foreign Exchange (Forex) market, the domestic currency resumed lower at 60.21 a dollar from Monday's close of 60.13. It moved down further to a low of 60.24 on weak local stocks.
Later, the rupee rebounded in line with late recovery in equities to a high of 60.05 before settling at 60.06, showing a rise of seven paise or 0.12%. This is its strongest level against the dollar since 59.93 on July 11.
The forex market was closed yesterday on account of "Ramzan Id".
The benchmark S&P BSE Sensex broke its two-session losing string and rose by 96.19 points or 0.37% on Wednesday.
Pramit Brahmbhatt, CEO, Veracity Group, said: "Rupee continued to trade sideways and ended slightly better. The rupee is likely to trade range bound as investors are waiting for the RBI's credit policy scheduled on 5th August. The rise in local equities with the help of FIIs also helped rupee."
The trading range for the spot rupee is expected to be within 59.60 to 60.40, he added.