Rising for the second straight day, the rupee today advanced by another 33 paise to close at 66.22 on sustained selling of US dollars by banks and exporters in view of weaker American currency in the overseas market.
Persistent foreign capital inflows also boosted the rupee value against the dollar, a forex dealer said.
The rupee resumed higher at 66.27 as against the Monday's level of 66.55 at the Interbank Foreign Exchange (Forex) market and hovered in a range of 66.35 and 66.10 per dollar before finishing at 66.22, showing a gain of 33 paise or 0.50 per cent.
The rupee has gained by 42 paise or 0.63 per cent in two days.
Meanwhile, the RBI fixed the reference rate for the dollar at 66.2406 and euro at 75.2758.
In cross-currency trades, the rupee dropped against the pound sterling to close at 95.22 from 94.33 on Monday.
It also moved down against the euro to 75.30 per euro from 75.26 per euro previously.
However, the domestic currency recovered against the yen to 60.64 per 100 yens from 61.49 previously.
The dollar index was down 0.09 per cent against a basket of six currencies in the late afternoon trade.
The dollar was trading lower against the yen in the global market today, as investors bought into the perceived safety of the Japanese currency following weakness in Asian stock markets and oil prices.
Investors have witnessed rapidly changing risk sentiment since the beginning of the week, when demand for the yen increased as a safe haven after major global oil producers failed to agree to a production freeze Sunday.
FIIs bought a net of Rs 548.90 crore of Indian shares
on Tuesday according to provisional data from exchanges.
In worldwide trade, the US dollar surged to multi-month high against basket of currencies and rose against the yen, bolstered by strong US housing data and inflation developments amid renewed expectations that the Federal Reserve may hike interest rates this year.
The US dollar index, which measures the greenback's strength against a trade-weighted basket of six major currencies, was up 0.13 per cent at 97.19 in early trade.
Oil prices traded almost flat in thin trade ahead of weekly US crude inventory data and also rallying dollar.
In the forward market, premium for dollar eased owing to mild receivings from exporters.
The benchmark six-month premium for December moved down to 178-180 paise from 180-182 paise and forward June 2017 contract also edged down to 376-378 paise from 378-380 paise on Tuesday.
Meanwhile, equities surged for the second straight day following sustained buying interest from ratailers amid optimism over passage of the GST bill and good monsoon rains.
The flagship Sensex jumped 128.27 pts to finish at 27,915.89, while broader Nifty rose pts to 8,565.85.
