The rupee continued to rule firm against the American currency for the sixth trading session, moving up marginally by one paise to 66.73 per dollar on persistent selling of dollars by banks and exporters on hopes of foreign funds into equity market on hopes of passing of GST bill.
Weakness of dollar in the overseas market also boosted the rupee value against the dollar, a forex dealer said.
The rupee opened lower at 66.79 per dollar from last closing level of 66.74 at the Interbank Foreign Exchange (Forex) market and declined further to 66.80 per dollar on initial dollar demand from importers.
However, it recovered afterwards to 66.70 pre dollar on selling dollars by banks and exporters before finishing at 66.73 per dollar, showing a mere gain of one paise or 0.01 per cent.
The domestic currency has gained by 62 paise or 0.92 per cent in six trading sessions.
The domestic unit hovered in a range of 66.80 per dollar and 66.70 per dollar during the day.
Meanwhile, the dollar index was trading down by 0.34 per cent against a basket of six currencies in late afternoon trade.
Mr Pramit Brahmbhatt of Veracity Financial Services said," Rupee opened marginally weaker at 66.79 as compared to previous close of 66.74 ". Ahead of key even, a passage of GST bill it was muted activity on our domestic equity market, as NIFTY closed with nominal loss of 14 points at 8623 levels.
The same stance we observed traders taking on rupee side. Thus to end the session, rupee appreciated negligible by 1 paisa and closed at 66.73/USD.
Trading range for the spot USD/INR pair will be 66.50 to 67/USD.
Meanwhile, the RBI fixed the reference rate for the dollar at 66.7612 and euro at 74.5990.
In cross-currency trades, the rupee fell against the pound sterling to close at 88.35 from 87.96 on Monday and dropped further against the euro to settle at 74.68 from 74.50 previously.
The domestic currency also moved down further against the Japanese yen to 65.55 per 100 yens from 65.27.
Overseas, the US dollar hovered near three-week lows against its major rivals in early Asian trade after soft US economic data undermined the case for an early Federal Reserve rate hike while the Australian dollar braced for the probability of a policy easing later in the day.
The dollar was lower against the yen in late afternoon trade, as details of Japan s latest stimulus package failed to impress traders.
Japanese Prime Minister Shinzo Abe's Cabinet approved a 28 trillion yen ( 274 billion) stimulus package Tuesday, the latest bid by Abe to jolt the nation s sluggish economy back to life. But actual new, direct spending will total only about one quarter of the package, helping to boost haven demand for the yen.
In the forward market, premium for dollar eased on mild receivings from exporters.
The benchmark six-month premium for January 2017 ended steady at 198-200 paise on Monday while far forward July 2017 contract eased to 398-400 paise from 399-401 paise.
Meanwhile, the Indian benchmark Sensex moved down by further by 21.41 points or 0.08 per cent to close at 27,981.71.