The rupee on Tuesday extended its gains for the third day, moving up by another three paise to close at 66.54 on persistent selling of dollars by banks and exporters in view of heavy capital inflows from foreign funds.
Weakness of dollar in the overseas market also boosted the rupee value against the dollar, a forex dealer said.
Foreign funds (FPP and FIIs) continued their buying spree as they bought shares worth Rs 2,042.94 crore yesterday as per the provisional data of stock exchanges.
The rupee resumed higher at 66.50 per dollar as against yesterday's closing level of 66.57 at the Interbank Foreign Exchange (Forex) market and firmed up further to 66.4625 on
initial selling of dollars by banks and exporters.
However, it dropped to 66.6075 on month-end dollar demand from importers before concluding at 66.54, still showing a gain of 3 paise or 0.05 per cent.
The rupee has gained by 17 paise or 0.25 per cent in previous three trading days.
Meanwhile, the dollar index was down by 0.11 per cent against a basket of six currencies in the late afternoon trade.
In the overseas market, the US dollar turned weak against a basket currencies in early trade after disappointing US economic data pushed it away from a 12-day peak and prospects
dimmed for an imminent US interest rate hike.
However, the dollar was a tad higher against the yen and the euro during the late Asian trade today, as investors await comments by Federal Reserve Chair Janet Yellen later in New
York for more clarity on the US central bank's next move.