Fresh selling of greenback by exporters and banks also aided the Indian rupee to record gains, forex dealers said.
Pumping of cash by foreign funds in local equity markets too helped the Indian rupee. Foreign institutional investors (FIIs) bought shares worth USD 176.32 million yesterday, as per Sebi data, taking the total to nearly USD 1.15 billion this month so far.
The dollar index was quoting down by 0.06 per cent against a basket of six major global currencies after minutes the Federal Reserve's meeting detailed risks that could keep interest rates low.
At the Interbank Foreign Exchange (Forex) market, the local currency resumed higher at 60.05 a dollar from overnight close of 60.14. In moved erratically in tune with movements in domestic stocks.
The Indian rupee finally settled at 60.07, a rise of 7 paise from its previous close.
Meanwhile, the benchmark BSE Sensex, which washed out a major part of early gains on fag-end selling, rose 13 points to close at a new peak.
Forward dollar premium remained weak on sustained receipts by exporters.
The benchmark six-month premium payable in September dipped to 232.5-235.5 paise from 241.5-243.5 paise previously.
Far forward contracts maturing in March, 2015 also tumbled to 480.5-482.5 paise from 490-492 paise.
The Reserve Bank of India fixed the reference rate for dollar at 60.2115 and for the euro at 83.3340.
The rupee moved down further against the pound to 100.79 from 100.67 previously. It also softened to 59.04 per 100 Japanese yen from 58.94. It plunged to 83.32 per euro from 82.96.