The rupee gained 6 paise to settle at 72.96 (provisional) against the US dollar on Tuesday tracking weak American currency and heavy buying in domestic equities.
Analysts said the rupee is trading in a narrow range as traders remained cautious ahead of the Reserve Bank of India (RBI) monetary policy scheduled on Friday.
At the interbank forex market, the rupee opened on a flat note at 73.02, and gained ground to touch an intra-day high of 72.92. The local unit also touched a low of 73.05 during the day.
It finally finished at 72.96, higher by 6 paise over its last close. On Monday, the rupee had finished at 73.02 against the American currency.
The dollar index, which gauges the greenback's strength against a basket of six currencies, declined 0.06 per cent to 90.92.
On the domestic equity market front, the BSE Sensex ended 1,197.11 points or 2.46 per cent higher at 49,797.72, while the broader NSE Nifty advanced 366.25 points or 2.57 per cent to 14,647.85.
Foreign institutional investors were net buyers in the capital market as they purchased shares worth Rs 1,494.23 crore on Monday, according to exchange data.
Brent crude futures, the global oil benchmark, rose 1.46 per cent to USD 57.17 per barrel.
For in-depth, objective and more importantly balanced journalism, Click here to subscribe to Outlook Magazine