Dollar selling by exporters and a weak US currency overseas too aided the rupee upmove.
At the Interbank Foreign Exchange (Forex) market, the domestic currency commenced higher at 60.15 a dollar from last close of 60.24, but fell back to a low of 60.1975.
Later, it bounced back and touched a high of 60.05 before concluding at 60.09, up by 15 paise or 0.25 per cent. The 15-paise rise today is the rupee's best daily gain since July 11 when it improved by 26 paise. The closing value of 60.09 is its strongest level since 60.07 on July 14.
The benchmark S&P BSE Sensex continued its upward march for the seventh straight session and today closed up by 121.53 points, or 0.47 per cent, at a new record high.
FIIs infused Rs 412.03 crore yesterday, as per provisional data with stock exchanges.
The dollar index was down 0.05 per cent against a basket of six major global currencies.
Pramit Brahmbhatt, Veracity Group CEO, said: "Rupee continued to trade strong and appreciated by almost a quarter per cent. Local equities continued their bull run, which helped rupee trade strong against the dollar.
"However, importer month-end dollar demand restricted the rupee appreciation. The trading range for the spot rupee is expected to be within 59.70 to 60.60."
Meanwhile, forward dollar premia declined further on persistent receipts by exporters.
The benchmark six-month premium payable in December eased to 219-221 paise from previous close of 222-224 paise.
Far-forward contracts maturing in June, 2015 also declined to 462-464 paise from 465.5-467.5 paise.
The Reserve Bank of India fixed the reference rate for dollar at 60.1830 and for the euro at 81.0305.
The rupee remained firm against the pound to end at 102.38 from overnight close of 102.80 and moved up further to 80.95 per euro from 81.23. It also rose to 59.27 per 100 Japanese yen from 59.34.