The rupee today rose by 13 paise to close at 65.04 against the US currency on the back of foreign fund inflows after sharp gains in equity markets and weakness in the dollar against global currencies.
Foreign funds returning to the stock markets and the dollar's losses against the Asian peers bolstered the Indian currency, a forex trader said.
Asian currencies rose against the dollar after the jobs report on Friday suggested the stability in the US economy but without any wage increase which helped rein in inflationary concerns, a dealer said.
The dollar index was trading at 90.01, down 0.09% from its previous close of 90.093.
Crude oil prices receding from their last weekend's high level on expectations that the US production will increase in 2018 also propped up the domestic currency.
The rupee opened on a strong note and surged by 23 paise to 64.94 against the US dollar at the interbank forex market on fresh selling of the greenback by exporters and banks.
Later, it gave up some of its gains to touch a low of 65.0675 in day trade but closed at 65.04 per dollar, a gain of 13 paise or 0.19 per cent over the previous close on Friday.
According to the provisional stock exchange data, foreign investors put in Rs 374.65 crore in equity markets on net basis today.
Stocks also zoomed as trade war fears took a back seat after growing prospects of the US economy, with the BSE Sensex posting its biggest single-day gain in two years. The 30-share Sensex rose by 610 points or around 1.8 per cent to close at 33,917.94.
Meanwhile, the Reserve Bank of India fixed the reference rate of the rupee at 65.0199 against the US dollar and 80.0915 for the euro.
In the cross currency trade, the rupee closed flat at 90.06/08 against the pound sterling. It strengthened against the euro to finish at 79.98 from 80.16 earlier.
The Indian unit also edged up against the Japanese yen to conclude at 61.01 per yens from 61.04 yesterday.