Extending its gains for the third straight day, the rupee today appreciated by 14 paise against the American currency to end at one-week high of 67.03 on the back of robust dollar inflows in equities.
The domestic currency was further supported by unwinding of long-dollar positions by speculators and exporters.
At the Interbank Foreign Exchange (Forex) market, the domestic unit opened firmly higher at 67.02 compared to Thursday's finish of 67.17 on sustained dollar selling by banks and exporters.
But it failed to maintain early momentum and retreated to touch a intra-day low of 67.12 in mid-morning deals on fresh bouts of dollar demand.
However, rupee staged a dramatic recovery in afternoon to reclaim the significant 66-mark to hit a high of 66.95 before ending the session at 67.03, revealing a smart gain of 14 paise, or 0.21 per cent.
It has recovered 72 paise in three sessions.
Meanwhile, the RBI fixed the reference rate for the dollar at 67.0613 and euro at 75.0885.
In cross-currency trades, the rupee continued to rule firm against the pound sterling and ended at 98.19 compared to 98.79 yesterday and recovered against the euro to conclude at 74.85 from 75.10 earlier.
The rupee on the other hand fell back against the yen to settle at 61.12 per 100 yens compared to 61.06.
Meanwhile, FIIs bought shares worth a net Rs 581.29
crore yesterday, as per provisional data released by the stock exchanges.
On the global front, the dollar rebounded after a brief slide ahead of Federal Reserve chair Janel Yellen's speech later in the day and ongoing uncertainty about whether the UK will vote to stay in the European Union.
The dollar index, which tracks the world's reserve currency against a basket of its peers, is up by 0.14 per cent at 95.28.
Brent oil futures eased after touching above USD 50 a barrel - the highest since November 2015 on fading global supply glut. It was last seen trading at USD 49.23.
In forward market, premium for dollar moved down further on sustained receivings from exporters.
The benchmark 6-month premium for October fell to 173-175 paise from 175-177 paise and far-forward April 2017 contract also softened to 370-372 paise from 372-374 paise earlier.
In the meantime, Indian bourses remained under the tight grip of bulls for the fourth straight day and climbed to fresh 7-month high amid buoyant investor sentiment.
The flagship index Sensex jumped by a hefty 286.92 points to end at 26,653.60 while the broader Nifty zoomed 87 points to close comfortably above 8,100-mark.
