The rupee strengthened by 57 paise to finish at a one-month high of 75.09 per US dollar on Thursday, buoyed by foreign fund inflows and a robust trend in the equity market.
The greenback weakening overseas and optimism over a COVID-19 drug trial in the US further supported the local unit, forex traders said.
Moreover, investor risk appetite is improving as India could relax lockdown restrictions in many areas from May 4, they added.
This is the fourth consecutive day of gain for the rupee, during which it has appreciated by 137 paise.
At the interbank foreign exchange, the rupee opened at 75.17. During the session, it touched a high of 74.94 and a low of 75.20.
The domestic unit finally settled at 75.09, registering a rise of 57 paise over its previous close.
More From This Section
On Wednesday, the local unit had settled at 75.66 against the US dollar.
Traders said fears surrounding COVID-19 faded to some extent after US pharma firm Gilead's drug remdesivir showed promise in treating coronavirus patients.
"Also, several countries are easing lockdown restrictions which means the economies will start to get back on track," said Rahul Gupta, Head of Research- Currency, Emkay Global Financial Services.
Gupta, however, added that "there is still risk of a second wave of infection and India's macros are not attractive enough to bring in heavy dollar inflows. Thus, going ahead USD/INR spot may trade above the support of 74.50 towards 75.50/76.00."