Following a strong equities market and inflows of foreign funds, the rupee rose for the fifth consecutive session, closing at 83.11 (provisional) versus the US dollar on Tuesday.
The native currency was also helped, according to forex dealers, by recent weakening in the US dollar and crude oil prices that have been trading around USD 77 per barrel.
The local currency started the day strong at 83.07 on the interbank foreign exchange market and fluctuated throughout the session between the highest level of 83.04 and the lowest level of 83.13 against the US dollar.
It eventually closed 3 paise higher than its previous closing, at 83.11 (provisional) versus the dollar.
One day after increasing by nine paise, the local currency ended the day one paisa higher at 83.14 on Monday.
According to analysts, investors will be closely monitoring both the local inflation figures and the US statistics that will be announced later this week.
The dollar index, which measures the strength of the US dollar relative to a basket of six other currencies, was up 0.17 percent at 102.10 on Tuesday.
The benchmark for global oil, Brent crude futures, increased 1.50 percent to USD 77.26 a barrel.
Regarding the local equities market, the Sensex ended the day at 71,386.21 points, up 30.99 points, or 0.04 percent. To reach 21,544.85 points, the Nifty increased by 31.85 points, or 0.15 percent.
A day after buying stocks for Rs 1,696.86 crore in the previous session, foreign institutional investors (FIIs) purchased shares of Rs 16.03 crore on Monday, according to exchange data.
