The rupee strengthened further by 14 paise to end at 66.77 against the US currency on the back of sustained dollar selling by exporters amid weak overseas tone.
Robust FII inflows into the equities and debt predominantly supported the domestic currency to sustain its momentum for the second consecutive day.
Foreign portfolio investors (FPIs) bought shares worth a net Rs 435.65 crore on Friday, as per provisional data from the stock exchanges.
A breathtaking rally in domestic equities, supported by buoyant global sentiment following the BoE’s decision to ease its monetary policy also provided added momentum to the rupee, a forex dealer commented.
Foreign inflows are likely increase on the back of improved sentiment for reforms after the passage of the Constitution Amendment bill on GST by the Rajya Sabha, the dealer added.
The domestic currency was further supported by unwinding of long-dollar positions by speculators. The greenback largely traded little changed against all its major currencies.
Maintaining its strong edge against the dollar, the home unit resumed higher at 66.85 from last closing value of 66.91 at the Interbank Foreign Exchange (Forex) market.
After falling back briefly to 66.8925 in late morning trade, rupee recouped smartly to hit a fresh intra-day high of 66.7450 towards the fag-end trade before ending at 66.77, revealing a sound gain of 14 paise, or 0.21 per cent.
It has gained 22 paise in two-days.
The US dollar index are trading lower by 0.22 per cent at 95.55 in early trade.
Meanwhile, the RBI fixed the reference rate for the dollar at 66.8141 and euro at 74.4510.
In cross-currency trades, the rupee softened against the pound sterling to settle at 87.95 from 87.94 and also eased against the Japanese yen to end at 66.05 per 100 yens as compared to 66.01 on Thursday.
The domestic unit, however firmed up against the euro to close at 74.32 from 74.42 earlier.
In the forward market, premium for dollar continued to drift owing to consistent receivings from exporters.
The benchmark six-month premium for January 2017 eased to 191-193 paise from 192.5-194.5 paise and far forward July 2017 contract also edged down to 388-390 paise as compared to 390.5-392.5 paise previously.
In the meantime, the flagship benchmark BSE Sensex shot-up by 363.98 points to end at 28,078.35, while broader Nifty jumped 132.05 points to 8,683.15.