The rupee today strengthened by another five paise to 64.05 per US dollar following sustained selling of the American currency by exporters and banks.
The home currency has appreciated by 7 paise in two days despite prevailing geopolitical uncertainties.
Extreme bearish dollar overseas also supported the rupee recovery momentum.
However, sluggish local capital markets along with massive capital outflows capped rupee's gains to some extent.
The rupee today opened on a positive note at 64.04 as compared to overnight close of 64.10 at the interbank foreign exchange market.
The local unit gained past 64-mark to hit a fresh intra-day high of 63.98 in late afternoon deals before ending at 64.05, revealing a smart gain of 5 paise, or 0.08 per cent.
The RBI, meanwhile, fixed the reference rate for the dollar at 64.0276 and for the euro at 76.3593.
The dollar index, which measures the greenback's value against a basket of six major currencies, was sharply down at 91.83.
In cross-currency trades, the rupee dropped further against the pound sterling to end at 83.85 from 83.59 per pound and also fell against the euro to finish at 76.73 from 76.41 earlier.
The local currency, however, ended higher against the Japanese yen at 58.85 per 100 yens from 58.86 yesterday.
Meanwhile, bourses endured a rocky day of trading sparked by bout of extraordinary volatility as stocks whipsawed violently after a spectacular start amid deepening worries over North Korea.
Asian markets, however, bucked series of losing streak following Wall Street's stronger lead on debt limit deal in the US.
The flagship Sensex settled steady at 31,662.74, while the broader NSE Nifty gained 13.70 points at 9,929.90.
Foreign portfolio investors (FPIs) sold shares worth a net Rs 1,353.02 crore yesterday, showed provisional data.
Foreign funds have turned net sellers in August and have been net sellers so far in September in the midst of ongoing geo-political woes, a forex dealer said.
The dollar fell to a more than one-week low against major currencies overseas, despite positive news on the US political front after Trump reached a short-term deal with Democrats, despite opposition from Republicans, to extend the US debt limit for three months until December 15.
Elsewhere, the euro drifted higher against a broad swathe of currencies ahead of much awaited European Central Bank meeting where policymakers may strike a cautious tone about the currency's strength.
In forward market today, premium for dollar edged higher owing to fresh paying pressure from corporates.
The benchmark six-month premium payable in February declined to 126-128 paise from 129-131 paise and the far forward August 2018 contract also edged down to 264-266 paise from 268-270 paise earlier.
On the international energy front, crude prices firmed up to hit a near 3-1/2-month highs as US refiners restarting after Tropical Storm Harvey increased their crude processing and the US dollar declined.
Brent crude futures were up 39 cents at USD 54.59 a barrel in early Asian trade - the highest since May 25.
US West Texas Intermediate (WTI) crude were up 8 cents at USD 49.24 a barrel, near a four-week high.
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)