Fresh dollar selling by exporters amid renewed capital inflows too aided the rupee rise, a forex dealer said.
The Forex market was closed on October 23 and 24, on account of Diwali "Laxmi Pujan" and "Balipratipada".
At the Interbank Foreign Exchange (Forex) market, the domestic unit commenced strong at 61.21 a dollar from previous weekend's close of 61.44 but immediately touched a low of 61.37.
However, firm local equities on hopes of further economic reforms by Narendra Modi government after BJP's strong show in two state polls, Maharashtra and Haryana boosted the market sentiment.
It later, bounced back to a high of 61.15 before settling at 61.27, showing a rise of 17 paise or 0.28 per cent. The rupee has gained all three trading days of the week. Last week, it had declined by nine paise or 0.15 per cent.
Weekend comments from members of the US Federal Reserve appeared to cement the view that the central bank will not hurry in raising rates too as it has a sentimental impact on the rupee and will lead to move investments by foreign investors.
The Indian benchmark sensex zoomed by 742.52 points or 2.84 per cent during the truncated week while FIIs/FPIs bought shares worth USD 269.51 mln on the first two days of the week as per Sebi data.