In line with rising local equities, the rupee today firmed up by 34 paise to close at eighth-month high of 60.14 against the dollar on sustained capital inflows.
Dollar selling by exporters and some banks also aided the rupee surge, a forex dealer said.
At the Interbank Foreign Exchange (Forex) market, the domestic currency resumed strong at 60.28 a dollar from last close of 60.48.
It improved to a high of 60.07 before settling at 60.14, rupee's highest closing since July 29, 2013 when it had concluded at 59.41.
The local currency has gained 120 paise or 1.96 per cent in four straight days of trading.
"The rupee has been very well supported by consistent FII flows in debt and equity markets. Apart from the flows, slight weakness in the US dollar and positive closing in the domestic stock markets is seen helping the Indian currency," said Abhishek Goenka, Founder & CEO, India Forex Advisors.
The dollar index was up by 0.16 per cent against a basket of six major global rivals in the overseas market.
The Indian benchmark Sensex today registered its all-time closing high of 22,095.30. Intra-day, it was at historical peak of 22,172.10 points.
The NSE Nifty, comprising 50 shares, also closed above 6,600 level for the first time at 6,601.40 points. It touched intra-trade record high of 6,627.45 points.
Foreign institutional investors FIIs injected USD 215.5 million yesterday, as per Sebi data, taking the total to over USD 2.7 billion in the current month so far.
Pramit Brahmbhatt, CEO, Alpari Financial Services, said: "Rupee continued to gain and traded to an eight-month high as foreign investors continued to invest in India. The gain was capped by the importers as they find the USD-INR pair at the attractive levels.
