The rupee rose by 6 paise to close at 74.28 (provisional) against the US dollar on Tuesday amid a firm trend in domestic equities and a weak American currency.
The rupee moved in a narrow range ahead of the Reserve Bank of India's (RBI) policy decision and the US non-farm payrolls data, forex dealers said.
At the interbank forex market, the local unit opened at 74.36 against the greenback and witnessed an intra-day high of 74.21 and a low of 74.36.
It finally ended at 74.28 against the American currency, registering a rise of 6 paise over its previous close. On Monday, the rupee had settled at 74.34 against the US dollar.
"Rupee continued to rally today, albeit in a quiet fashion in comparison to domestic equities that hit life-time high. Overseas forex markets also remained lacklustre with G10 currencies trading in a tight range on thin volumes," said Dilip Parmar, Research Analyst, HDFC Securities.
Looking ahead, the focus will remain on RBI monetary policy. The inflows from primary market will remain robust and the rupee is expected to trade with positive bias in the near term, Parmar added.
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Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, dipped 0.07 per cent to 91.98.
On the domestic equity market front, the BSE Sensex ended 872.73 points or 1.65 per cent higher at 53,823.36, while the broader NSE Nifty advanced 245.60 points or 1.55 per cent to 16,130.75.
Brent crude futures, the global oil benchmark, rose 0.80 per cent to USD 73.47 per barrel.
Meanwhile, foreign institutional investors were net sellers in the capital market on Monday as they offloaded shares worth Rs 1,539.88 crore, as per exchange data.
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