Dollar selling on hopes of more foreign funds inflows into equity market supported the rupee rise, dealers said.
Also a weak dollar overseas supported the rupee sentiment, they added.
Surging off the Brexit blues, stock markets returned to normal on persistent buying pressure with the benchmark BSE Sensex rallying by 259 points to close at 26,999.72 in view of various positive factors.
As per provisional exchange data, foreign investors put in net Rs 1,107.42 crore in equities today.
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It hovered in a range of 67.4750 and 67.72 per dollar before ending at 67.52 per dollar, showing a gain of 16 paise or 0.24 per cent. The rupee had gained by 43 paise or 0.63 per cent in two days.
Meanwhile, the dollar index fell by 0.21 pct against a basket of six currencies in the late evening trade.
The RBI fixed the reference rate for the dollar at 67.6166 and euro at 75.0071.
In cross-currency trades, the rupee recovered against the pound sterling to finish at 90.87 from 90.90 yesterday while the dropped against the euro to 75.19 from 74.96.
At overseas, the British pound traded higher for a third session today as fading fears over Brexit heightened investors' appetite for what are typically riskier assets.
In forward market, premium for dollars declined on good receivings from exporters.
Meanwhile, Indian financial markets witnessed a massive
buying spree amid a global rally, lifting key benchmark indices to multi-month high.
The benchmark BSE Sensex zoomed 440.35 points to end at 28,343.01 while the broader Nifty soared 136.90 points to close at 8,744.35.
In the forward market, premium for dollar showed easy to modestly firm trend.
Crude prices edged higher today supported by production suspensions in the US Gulf due to an expected tropical storm and speculation that producers meeting in Algeria next month will act to prop up prices.