Rising for the sixth straight session, the rupee appreciated by 24 paise to finish at 73.07 against the US dollar on the last trading day of the year on Thursday, supported by weak American currency and rise in risk appetite.
Traders said market sentiments improved on hopes of global economic recovery from pandemic buoyed by rollout of Covid-19 vaccines and extraordinary fiscal and monetary stimulus.
At the interbank forex market, the domestic unit opened at 73.15 against the US dollar and witnessed an intra-day high of 73.01 and a low of 73.17.
The local unit finally settled at 73.07, registering a rise of 24 paise over its previous close.
On Wednesday, the rupee had appreciated by 11 paise to close at a more than two-month high of 73.31 against the US dollar.
In the last six trading sessions, the Indian rupee has gained 77 paise.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, fell 0.09 per cent to 89.59.
"Rollout of vaccine strengthened hopefulness that surging infection cases may be checked. Additionally, UK granted emergency use authorization for vaccine developed by University of Oxford and AstraZeneca PLC," said Saif Mukadam, Research Analyst, Sharekhan by BNP Paribas.
Furthermore, rupee may gain strength on consistent FII inflows. Rupee may trade in the range of 72.75 to 73.65 in next couple of sessions, he added.
On the domestic equity market front, the BSE Sensex ended 5.11 points or 0.01 per cent higher at 47,751.33, while the broader NSE Nifty slipped 0.20 points to 13,981.75.
Foreign institutional investors were net buyers in the capital market as they purchased shares worth Rs 1,824.52 crore on Wednesday, according to provisional exchange data.
Brent crude futures, the global oil benchmark, fell 0.21 per cent to USD 51.52 per barrel.
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