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The rupee ended the week with gains of nearly 1 per cent or 64 paise compared to previous week's closing level of 67.96.
Extending gains for the third day in a row, the rupee rose by 20 paise to settle at 1-1/2 week high of 67.32 a dollar on persistent dollar selling by banks and exporters amid firm equity markets.
Banks and exporters preferred to reduce their dollar position on hopes of more foreign capital inflows in view strong equity markets.
The rupee opened higher at 67.50 per dollar against the Thursday’s closing level of 67.52 per dollar at the Interbank Foreign Exchange (Forex) market and firmed up further to 67.31 per dollar in the day trade.
The domestic currency closed with gains of 20 paise or 0.30 per cent at 67.32, the highest closing level since June 20 when the rupee had settled at 67.31.
The rupee ended the week with gains of nearly 1 per cent or 64 paise compared to previous week's closing level of 67.96.
The dollar index was trading down by 0.18 per cent against a basket of six currencies in the late afternoon trade.
Meanwhile, RBI fixed the reference rate for the dollar at 67.4410 and euro at 74.7449.
In cross-currency trades, the rupee firmed up further against the pound sterling to finish at 89.52 from 90.87 yesterday and recovered against the euro to 74.89 from 75.19.
The domestic currency moved up further against the Japanese yen to 67.67 per 100 yens from 65.68.
The BSE Sensex rallied over 145 points to end at 8-month high of 27,145, buoyed by data that showed manufacturing activity gathered steam last month amid strong foreign capital inflows.
Foreign investors today withdrew a net Rs 187.51 crore from stocks, provisional exchange data showed.
"Positive opening of domestic equity market helped rupee to appreciate and rupee traded higher putting pressure on dollar," Pramit Brahmbhatt of Veracity Financial Services said, adding that trading range for the spot USD/INR pair will be 67 to 67.50/USD.
Globally, the British pound fell against the US dollar today, still under pressure amid expectations the UK monetary policy will be eased again.
In forward market, premium for dollars steady to better trend due to mild paying pressure from corporates.
The benchmark six-month premium for November ended steady at 170.5-172.5 paise while forward May 2017 contract also moved up to 368-370 paise from 367.5-369.5 pasie.
Meanwhile, oil prices rose in Asia today as traders welcomed assurances from central bank around the world that they were ready to step in to prevent a global rout following Britain's vote to leave the European Union.