The rupee on Tuesday gained 10 paise to end the day at 60.11 against the dollar on fag-end selling of the US currency by banks and exporters.
The rupee resumed higher at 60.10 as against its previous closing level of 60.21 at the Interbank Foreign Exchange (Forex) market.
It firmed up further to 60.05 per dollar in view of foreign capital inflows into equity markets.
However, it fell to 60.23 before ending at 60.11, a gain of 10 paise from its previous close.
In New York market, the dollar was little changed against major rivals on Monday.
Meanwhile, the Indian benchmark Sensex advanced by 63.30 points or 0.28% to close at 22,508.42.
Pramit Brahmbhatt, Veracity Group CEO, said: "Rupee appreciated taking cues from the dollar index which is at present trading near 6-month low. Also, the local equities traded positively for the day and posted its second consecutive gain which further helped rupee to trade strong."
The benchmark six-month premium payable in October ended the day at 222-224 paise against 228-230 paise previously.
Far forward contracts maturing in April, 2015 ended at 449-451 paise against 458.5-460.5 paise previously.
The Reserve Bank of India fixed the reference rate for dollar at 60.20 and for the euro at 83.55.
The rupee dropped further against the pound to 102.00 from 101.54 previously and remained weak against the euro to 83.77 from 83.53.
It, however, edged up to 59.06 per 100 Japanese yen from last close of 59.07.