The rupee on Friday surged by another 34 paise to close at a one-week high of 71.84 against the US dollar on positive macro data and hopes of policy intervention by the government to defend the volatile currency.
Extending gains for a second session, the domestic unit hit a session high of 71.53 in early trade.
Sustained dollar selling by exporters and banks along with the greenback's weakness against other major Asian and emerging market currencies, in turn keeping the buoyant tone intact.
Rupee also benefitted from the massive US Dollar re-pricing in the aftermath of the weak US inflation report, discounting the chances of Fed hiking rates four times this year.
A combination of positive macro-related developments after the country's industrial production grew at 6.6% in July and retail inflation cooled to a 10-month low of 3.69% in August, strengthened the rupee sentiment.
Earlier on Friday, official data showed WPI-based inflation eased to a four-month low of 4.53% in August.
India's benchmark 10-year sovereign yield softened to 8.12%.
The rupee got a shot in the arm after the government said all steps will be taken to ensure the domestic currency does not depreciate to "unreasonable levels", amid reports that Prime Minister Narendra Modi will take stock of the economic situation over the weekend.
The rupee had rebounded from an all-time low of 72.92 to end up a strong 51 paise to end at 72.18 to the dollar in the previous session on Wednesday.
The domestic currency has been sliding against the US dollar since August, depreciating over 6 per cent since then as oil prices rebounded and trade tensions revved up.
The 'feel good' factor in the economy and the relative political stability alongside government's continued commitments towards strong governance amid relatively low inflation rates largely shielded Indian currency from any big drag, a forex dealer commented.
Emerging market currencies also showed some sign of stability as investors sighed with relief after Turkey's central bank hiked its policy rate to 24% to restore confidence in the lira.
Meanwhile, crude prices clawed back some of its losses after suffering the largest daily drop in a month as concerns about oil supply are countering worries that emerging market crises and trade disputes could dent demand.
Benchmark Brent crude is trading at $78.25 a barrel in early Asian trade.