The rupee logged its biggest single-day gain of this year, of 57 paise, to close at a nearly three-week high of 67.85 against the dollar on fresh selling by banks and exporters.
Weakness of dollar in the overseas market also boosted the rupee value against the American currency, a forex dealer said.
The rupee resumed higher at 68.27 from Monday’s closing level of 68.42 at the Interbank Foreign Exchange Market (Forex) in Mumbai on Tuesday and shot up further to close at 67.85 on sustained selling of dollars, disclosing a gain of 57 paise or 0.83%.
It has gained by 87 paise or 1.27% in three days.
It hovered in a range of 67.85 and 68.36 per dollar during the day.
Meanwhile, the dollar index was up by 0.18% against a basket of six currencies in late afternoon trade.
The yen was stronger against rival currencies in Asia trade on Tuesday, hitting a fresh three-year high against the euro, as investors sought safety following downbeat economic reports from the eurozone and the US.
Meanwhile, the benchmark BSE Sensex recovered sharply by 777.35 points or 3.38% to finish at 23,779.35.
Pramit Brahmbhatt of Veracity Financial Services said, “As expected the rupee opened on a stronger note and continued to trade with positive bias. Post budget, we witnessed the rupee trading with positive bias and with a smart gain.
“Taking cues from domestic equity market the rupee started trading post 68 levels. In domestic equity market, we saw Nifty gaining 235 points. To end the day, the rupee closed with a gain of 57 paise at 67.85 level.”
Trading range for spot USD/INR pair is expected to be within 67.50 to 68.20 levels. In forward market, premium for dollar declined further on sustained receivings from exporters.
The benchmark six-month premium for August moved down to 222-224 paise from 226-228 paise on Tuesday and far forward February contract also fell to 425-427 paise from 432-434 paise.
The RBI fixed the reference rate for the dollar at 68.1580 and for the euro at 74.2172.
In cross-currency trades, the rupee eased against the pound sterling to finish at 94.89 from 94.86 on Monday while firmed up further against the euro to 73.67 from 74.50 on Monday.
The domestic unit also moved up further against yen to finish at 59.95 per 100 yen from 60.61.