In listless trade on Monday, the rupee gained five paise to end the day at 62.07 against the US dollar amidst a rise in stock markets on signs of continued capital inflows.
A weakness in the American currency in overseas markets and mild selling of dollar by exporters helped the rupee sentiment, a forex dealer said.
At the Interbank Foreign Exchange (Forex) market, the domestic unit commenced a tad better at 62.11 a dollar from last weekend's close of 62.12.
The local currency traded narrow before concluding at 62.07, a net rise of five paise from last Friday's level.
Meanwhile, the benchmark BSE Sensex rose by 111 points on signs of continued capital inflows. FIIs injected USD 98.82 million last Friday, as per Sebi data.
The dollar index was down by a mere 0.05% against a basket of six major global rivals.
Pramit Brahmbhatt, CEO, Alpari Financial Services (India), said: "Today Indian shares closed up by almost half per cent which helped the rupee to trade strong for the second consecutive day.
"The US dollar traded weak against the euro, after Germany's IfO business climate index rose by more than expected which forced dollar index to trade weak for the second consecutive day."
Forward dollar premium recovered after a long time due to fresh payments from banks and importers.
The benchmark six-month forward dollar premium payable in July rose to 227-229 paise from last close of 225.5-227.5 paise.
Far forward contracts maturing in January 2015 also rebounded to 471.5-473.5 paise from 468.5-470.5 paise.
The RBI fixed the reference rate for the dollar at 62.11 and for the euro at 85.32.
The rupee remained firm to end at 103.30 against the pound from 103.60 previously, while fell back to 85.29 per euro from 85.15. It also softened to 60.64 per 100 Japanese yen from 60.63.