The rupee strengthened by 28 paise to close at 74.73 (provisional) against the US dollar on Monday, supported by positive domestic equities and weakness in the American currency in global markets.
At the interbank forex market, the local unit opened at 74.81 against the greenback and witnessed an intra-day high of 74.67 and a low of 74.88.
It finally ended at 74.73 against the American currency, registering a rise of 28 paise over its previous closing. On Friday, the rupee had settled at 75.01 against the American currency.
The dollar index, which gauges the greenback's strength against a basket of six currencies, fell 0.08 per cent to 90.78.
"The Indian Rupee appreciated amid weakness in dollar and rise in risk appetite in the global markets. Markets sentiments improved as recent manufacturing and services PMI data across major countries in world showed expansion in activity signalling economic recovery from the pandemic," said Saif Mukadam, Research Analyst, Sharekhan by BNP Paribas.
However, sharp gains were prevented on FII outflows and on concern that rising Covid-19 cases in India and lockdown restriction in some states may hurt economic recovery, Mukadam added.
The rupee may trade in the range of 74.30 to 75.50 in next couple of sessions, he said.
Meanwhile, Brent crude futures, the global oil benchmark, fell 1.86 per cent to USD 64.88 per barrel.
On the domestic equity market front, the BSE Sensex ended 508.06 points or 1.06 per cent higher at 48,386.51, while the broader NSE Nifty advanced 143.65 points or 1 per cent to 14,485.00.
Foreign institutional investors were net sellers in the capital market as they offloaded shares worth Rs 1,360.76 crore on Friday, according to exchange data.