The rupee on Tuesday gained 45 paise to end at nearly three-month high of 53.80 against the American currency on persistent selling of dollars by banks and exporters on the back of sustained capital inflows from foreign funds.
Extending gains for the second consecutive day, the domestic currency ended at 53.80 per dollar, showing a gain of 45 paise, or 0.82 per cent.
The rupee had last ended at 53.50 on February 8, 2013.
The rupee resumed higher at 54.12 per dollar as against the last closing level of 54.25 per dollar at the Interbank Foreign Exchange (Forex) Market and hovered in a range of 53.79 per dollar and 54.25 per dollar before ending at 53.80 a dollar.
Persistent capital inflows from foreign funds mainly boosted the rupee value against the dollar, a forex dealer said.
Foreign institutional investors (FIIs) bought shares worth a net Rs 620.38 crore yesterday as per provisional data from the stock exchanges.
The Indian benchmark Sensex rose by 117 points or 0.60 per cent to end at 19,504.18.
Pramit Brahmbhatt, CEO, Alpari Financial Services (India) said USD/INR Pair continued to trade high for the second day taking cues from the dollar which traded weak against the major currencies mainly against the yen.
The RBI is likely to cut interest rates for the third time this year by 0.25 per cent as fall in inflation is expected to lift the economy from its lowest growth in a decade.
However, in London, the euro fell in their early trade after weak economic data gave further weight to expectations of an interest rate cut by the European Central Bank later this week.