The rupee resumed steady at 61.17 per dollar and hovered in a range of 61.07 and 61.22 per dollar before ending at 61.08 per dollar, showing a gain of nine paise or 0.15 per cent from its last close.
This is its highest closing value since 60.84 versus US dollar on August 5.
Crude oil prices fell in Asia today on easing concerns about supply disruptions arising out of conflicts in Ukraine and Iraq.
The dollar index was up by 0.21 per cent against a basket of six major global rivals on geopolitical concerns. The late strength in the dollar limited gains in the rupee.
"Rupee was seen starting the session on a firm note against the US dollar and was trading in a tight range today. Locally, there was absence of any major data or event," said India Forex Advisors Pvt Ltd.
In London, the euro fell towards 9-month lows against the dollar today, hurt by a plunge in German analyst and investor morale in August which added to signs of a slowdown in the euro zone recovery.
"Net selling from foreign funds in equity and debt coupled with broad gains in the US dollar limited the rupee's appreciation," said Suresh Nair, Director, Admisi Forex.
Meanwhile, the Indian benchmark Sensex rallied further by 361.53 points, or 1.42 per cent, to end at 25,880.77.
Pramit Brahmbhatt, Veracity Group CEO said: "The trading range for the Spot USD/INR pair is expected to be within 60.50 to 61.50".
In the forward market premium ended mixed due to uneven demand and supply transactions.
The benchmark six-month premium payable in January moved down to 239.5-240.5 paise from 239.5-241.5 paise yesteday.
While, far-forward contracts maturing in July, 2015 firmed up to 486-487 paise from 483-485 paise.
The Reserve Bank of India fixed the reference rate for dollar at 61.1847 and for the euro at 81.7762.
The rupee remained firm against the pound to close at 102.47 from 102.64 yesterday and also improved further against the Japanese yen to 59.72 per 100 from 59.90.
However, it recovered against the euro to 81.50 from 81.92 previously.