Weakness in the dollar overseas also boosted the rupee, a forex dealer said.
Indian rupee resumed higher at 62.20 per dollar from the previous close of 62.41 at the interbank foreign exchange market and rose to 61.87 per dollar.
The initial gains were trimmed on fag-end dollar demand from banks and importers and the local currency ended at 62.36 per dollar, a gain of five paise or 0.08 per cent.
The rupee has moved up 135 paise in the past four sessions.
In the global market, the dollar pared losses against other major currencies yesterday as investors considered when the Federal Reserve would start scaling back its bond-buying programme.
Analysts expect Federal Reserve chief Ben Bernanke to favour retaining the USD 85 billion a month stimulus programme at a speech later today.
The minutes of the Federal Open Market Committee meeting in October are expected to be released on Wednesday.
"Rupee was seen surpassing another key level of 62 against the US dollar today on the back of consistent speculation that the Fed will continue its ongoing quantitative easing," said Abhishek Goenka, CEO of India Forex Advisors.
The 30-share benchmark Sensex continued its firm trend for the third day and ended 40.08 points higher at 20,890.82.
Forward dollar premiums fell further on receipts by exporters.
The benchmark six-month forward dollar premium payable in April closed lower at 243-1/2-245-1/2 paise from 245-1/2-247-1/2 paise and far-forward contracts maturing in October declined to 482-1/2-484-1/2 paise from 485-487 paise.
The RBI fixed the reference rate for the dollar at 62.2311 and for the euro at 84.0585.
The rupee improved to 100.21 against the pound from 100.53 yesterday and remained firm at 84.17 per euro from 84.31. It fell to 62.45 per 100 Japanese yen from 62.37.