Traders said fall in crude oil prices and a firm trend in the domestic equity market also supported the rupee.
The rupee opened at 81.18 in the interbank foreign exchange market. After touching a day’s high of 80.91 and a low of 81.45, the rupee finally closed higher by 37 paise at 80.91 against the US currency during trading. It had closed at 81.28 per dollar, showing a fall of 50 paise in the previous trading session.
“Indian rupee strengthened against the US dollar on Tuesday as dollar outflow nullified gains made against the US dollar and strengthening of the Chinese yuan,” said Sriram Iyer, Senior Research Analyst, Reliance Securities.
Asian markets were boosted by the Chinese currency yuan, which posted gains ignoring weak Chinese data.
Meanwhile, the dollar index, reflecting the weakness or strength of the dollar against the world’s six major currencies, fell 0.38 per cent to 106.25.
Global oil benchmark Brent crude futures declined 1.47 per cent to USD 91.77 per barrel.
On the other hand, the 30-share Sensex of BSE closed at 61,872.99 points with a gain of 248.84 points.
According to stock market data, Foreign Institutional Investors (FIIs) remained net sellers in the capital market. He sold shares worth Rs 221.32 crore on Tuesday.