Mumbai: Extending gains against the American currency for the third consecutive day, the rupee Friday ended at 67.05 per dollar, higher by 2 paise on persistent selling of the greenback by banks and exporters in view of sustained foreign capital inflows into equities.
A recovery in the domestic equity market also boosted the rupee value against the dollar, a forex dealer said.
The rupee resumed lower at 67.15 as against Thursday's closing level of 67.07 at the Inter-bank Foreign Exchange (forex) market and dropped further to 67.25 on initial dollar demand from banks.
However, it recovered afterwards to 66.94 on fag-end selling of dollars before ending at 67.05, showing a gain of 2 paise or 0.03 percent.
It has gained by 30 paise 0.45 percent in three days.
The domestic currency hovered in a range of 66.94 and 67.25 per dollar during the day.
The dollar index was up 0.51 percent against a basket of six currencies in the late afternoon trade.
Overseas, the euro hovered near a 3-week high today, sitting on big gains after the European Central Bank suggested it was done with cutting interest rates for now.
The ECB on Thursday cut its main refinancing rate to zero from 0.05 percent and increased monthly asset buys to 80 billion euros from 60 billion euros.
The euro maintained its overnight strength during Asia trade today after European Central Bank President Mario Draghi signaled it was unlikely Thursday's rate cut would be followed with further reductions.
Meanwhile, the benchmark Sensex recovered by 94.65 points
or 0.38 percent today.
Pramit Brahmbhatt of Veracity Financial Services said, "The rupee opened on a weaker note on safe haven buying due to ECB interest rate cut. But the rupee maintained support in a range of 67.30-67.50/USD.
"Later, taking cues from domestic as well as global equity market, we saw recovery in the rupee. Today it had been very volatile trading session, but to end the day Nifty gained 24 points. Thus rupee appreciated by 2 paise and closed at 67.05/USD. Trading range for spot USD/INR is expected to be within 66.80?67.50/USD."
Meanwhile, foreign portfolio investors (FPIs) bought shares worth a net Rs 378.36 crore today, as per provisional data released by the stock exchanges.
In forward market, premium for dollar ended narrowly mixed due to uneven demand and supply transactions.
The benchmark six-month premium for August eased to 18.104.22.168 paise from 227.5-229.5 paise yesterday while far forward February 2017 contract moved up to 434.5-436.5 paise from 434-436 paise.
The RBI fixed the reference rate for the dollar at 67.0868 and euro at 74.9427.
In cross-currency trades, the rupee declined against the pound sterling to finish at 95.83 from 95.33 yesterday and also moved down against the euro to close at 74.32 from 73.59.
The domestic unit firmed up further against the yen to settle at 58.91 per 100 yens from 59.02 yesterday.