Rising for the second straight day, the rupee strengthened by 7 paise to end at 64.31 against the US dollar on sustained selling of the American currency by banks and exporters.
Abundant capital inflows into local equities alongside unwinding of long dollar positions by traders also gave some significant support to rupee trade.
The rupee opened higher at 64.33 from overnight closing of 64.38 at the forex market amid steady supplies of dollars.
The domestic unit gained further ground to hit an intra- day high of 64.26 in mid-morning deals and hovered in a narrow range before giving back some early advances to finish at 64.31, showing a gain of 7 paise, or 0.11 per cent.
The RBI, meanwhile, fixed the reference rate for the dollar at 64.3043 and for the euro at 69.8859.
Though, the forex trading was largely confined to a narrow range amid some caution ahead of key macro data release, a forex dealer commented.
The industrial production data (IIP) for March and both retail and wholesale inflation data for April came after market hours.
FIIs bought shares worth a net Rs 1,306.71 crore yesterday, extending their buying spree for the second session.
The US dollar traded generally higher across the board on hardening hopes that the Federal Reserve will raise US interest rates in June.
A trade deal between China and the US also lifted the dollar overseas sentiment.
Meanwhile, the domestic equities market took a breather from their record-breaking run on the back of profit-taking in recent outperformers as investors turned cautious ahead of inflation data.
Most Asian stocks wilted following Wall Streets' weak lead.
The flagship Sensex slipped over 62 points to end at 30,188.15, while broader Nifty fell 21.50 points to 9,400.90.
Both the broader NSE Nifty and the benchmark BSE Sensex hit record highs in the previous two sessions.
The dollar index, which tracks the US currency against a basket of six major rivals, was almost flat at 99.53.
In cross-currency trades, the rupee maintained its strong edge against the pound sterling and ended at 82.64 from 82.97 per pound and also inched up against the Euro to settle at 69.96 as compared to 69.97.
The home unit, however, fell back against the Japanese Yen to close at 56.48 per 100 yens from 56.45 earlier.
In forward market today, premium for dollar dropped further owing to sustained receivings from exporters.
The benchmark six-month premium payable in October moved down to 145-147 paise from 147-149 paise and the far forward April 2018 contract also declined to 299-301 paise from 303- 305 paise on Thursday.
In the international commodity front, crude prices remained firm as official data showed huge decline in US oil inventory. The market was also buoyed by the news that a number of OPEC members have shown enthusiasm, ahead of the meeting on May 25, in participating in the output cut extension.
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