The rupee extended its gains against the American currency for the second straight day, firming up by another 8 paise to close at 68.07 on selling of dollars by banks and exporters amid lower greenback overseas.
Expectations of good foreign capital inflows into equity market in view of firm trend in the stock market also boosted the rupee value against the dollar, a forex dealer said.
The rupee resumed lower at 68.18 per dollar as against the yesterday's closing level of 68.15 at the Interbank Foreign Exchange (Forex) market and dropped further to 68.19 per dollar on initial dollar demand from importers.
However, it firmed up afterwards to 68.0575 before ending at 68.07 per dollar, showing a gain of 8 paise or 0.12 per cent.
It has gained by 13 paise or 0.19 per cent in two days.
The dollar index fell by 0.26 per cent in the late afternoon trade against a basket of six currencies.
Overseas, the dollar was moderately lower against the yen today, with investors reluctant to drive it higher amid caution about potential jawboning to stem a stronger dollar from Donald Trump and his administration.
Many worry that US President Donald Trump's protectionist approach on trade could hurt economic growth, as he kicked off his presidency this week by signing an executive order pulling the US from the Trans-Pacific Partnership.
The Indian benchmark Sensex rose further by 332.56 points
or 1.21 per cent to close at 27,708.14.
In forward market today, premium for dollar declined on fresh receivings from exporters.
The benchmark six-month premium payable in June dropped to 134-136 paise from 137-139 paise yesterday and far forward December 2016 contract also went down to 277-279 paise from 280-282 paise.
The RBI fixed the reference rate for the dollar at 68.1556 and for the euro at 73.0901.
In cross-currency trades, the rupee fell against the pound sterling to close at 85.54/56 from 84.81/83, but moved up against the Euro to settle at 73.16/18 from 73.17/19.
It also rose against the Japanese Yen to 59.92/94 per yen from 60.13/15 previously.
