The rupee on Friday gained 18 paise against the dollar to close at one-week high of 55.34 on smart rebound in stocks, amid sustained weakness in dollar value overseas.
Sustained dollar selling by exporters and some banks in anticipation of further fall in the US currency in overseas markets helped the local unit gain for the second day in a row.
European Central Bank President on Thursday had said the bank will take necessary steps to protect the euro zone.
This helped dollar rival euro to rise further.
At the Interbank Foreign Exchange market, the local currency resumed higher at 55.43 a dollar from previous close of 55.52 and but immediately touched a low of 55.58.
It later recovered to a high of 55.30 before concluding at 55.34, showing a rise of 0.32 per cent.
The rupee had had spurted by 64 paise.
Meanwhile, the benchmark Sensex today rebounded sharply by 199.37 points or 1.20 per cent.
Foreign institutional investors sold shares worth $248.22 million in last three sessions since July 24.
The dollar index was down by 0.19 pct against a basket of six major rivals while New York crude oil was trading below USD 90 a barrel in Europe on Friday.