The rupee firmed up by another 14 paise on Thursday to close at a fresh one-month high of 66.91 on persistent selling of the American currency by banks and exporters in view of firm equities amid weakness of dollar in the overseas market.
Good foreign capital inflow also boosted the rupee value against the dollar, a forex dealer said.
Foreign portfolio investors and foreign institutional investors bought shares worth a net Rs 290.53 crore on Wednesday as per provisional data of the stock exchanges.
The rupee opened higher at 67.00 as against the last closing level of 67.05 at the Interbank Foreign Exchange (Forex) market and firmed up further to 66.87 before closing at over one-month high of 66.91 per dollar, showing a gain of 14 paise or 0.21%.
The rupee had last settled at 66.76 per dollar on June 10, 2016.
The domestic currency has gained by 27 paise or 0.40% in two days.
The domestic currency traded in a range of 66.87 and 67.0375 per dollar during the day.
The dollar index was trading lower by 0.03% against a basket of six currencies in the late afternoon trade.
Meanwhile, the RBI fixed the reference rate for the dollar at 66.9136 and euro at 74.3544 on Thursday.
In cross-currency trade, the rupee moved down further against the pound sterling to finish at 89.51 from 89.00 on Wednesday and also dropped against the euro to 74.72 from 74.27.
The domestic currency continued to rule firm against the Japanese yen at 63.30 per 100 yens from 64.07 on Wednesday.