The local currency that logged its best daily gain since March 6 seemed unperturbed by expectations that US Fed, which concludes a key meeting later tonight, will again taper its stimulus by another USD 10 billion and move away from technical guidance on when it will raise rates, said traders.
At the Interbank Foreign Exchange (Forex) market, the rupee commenced strong at 61.07 a dollar from previous close of 61.19, but fell back to a low of 61.17 on hesitancy in local equities.
It, later, bounced back to a high of 60.91 on fresh dollar selling by exporters and some banks coupled with foreign fund inflows worth Rs 1,069 crore in stocks today.
The rupee ended at 60.95 for the day, showing a rise of 24 paise or 0.39 pe cent. This is the strongest closing level for the rupee since 60.94 on March 11. Today's 24-paise rise is the also best since 64-paise jump on March 6.
However, the Indian benchmark S&P BSE Sensex today, in a see-saw trade, closed almost stable while dollar index was also up 0.06 per cent against a basket of global rivals ahead of Janet Yellen's inaugural policy as US Fed chief.
The benchmark 30-share Sensex today closed at 21,832.86 points from last close of 21,832.61 while FIIs infused Rs 1,011.95 crore yesterday as per provisional data with bourses.
Pramit Brahmbhatt, CEO, Alpari Financial Services, (India) said: "Investors are waiting for the outcome of Federal Reserve policy review due later today for the further direction. Expect the rupee to trade near 60.50 levels in coming days on positive sentiments. The trading range for the spot rupee is expected to be within 60.50 to 61.50."
Meanwhile, forward dollar premium ended lower on fresh receipts by exporters.
The benchmark six-month premium payable in August dropped to 230-232 paise from 235-237 paise previously.
Far forward contracts maturing in February, 2015 also dipped to 475-477 paise from 479-481 paise.
The RBI fixed the reference rate for dollar at 61.0970 for the euro at 85.07927.
The rupee recovered to 101.40 against the pound from last close of 101.61 and also rebounded to 84.85 per euro from 85.12. It, however, improved further to 60.06 per 100 Japanese yen from 60.22.