Weakness of dollar in the overseas market also boosted the rupee value against the dollar.
In New York, the dollar dropped last Friday, erasing its gains for the year, as the Federal Reserve's decision to buy more bonds. It devalued the currency, boosting investor appetite for stocks and commodities.
Back home, the rupee resumed higher at 53.80 a dollar, as against the last weekend's level of 54.30 at the Interbank Foreign Exchange (Forex) Market and rallied further to 53.66, before quoting at 53.79, at 1040 hrs.
The rupee had last closed at 53.79 on May 15, 2012.
Sustained capital inflows from foreign funds in equity market mainly boosted the rupee value, a forex dealer said.
The BSE 30-stock index, Sensex, had risen 177 points or 0.96 per cent, ahead of the RBI's monetary policy today.