Weakness of dollar in the overseas market also boosted the value of rupee against the dollar, a forex dealer said.
Exporters and banks preferred to reduce their dollar position on hopes of foreign capital inflows into domestic equity markets.
The rupee opened higher at 67.23 as against the last Friday’s closing level of 67.32 per dollar at the Interbank Foreign Exchange (Forex) market and hovered in a range of 67.1475 and 67.29 before ending at 67.27, showing a gain of 5 paise or 0.07 per cent.
The rupee has gained by 68 paise or one per cent in four trading days.
The dollar index was trading 0.06 per cent lower against a basket of six currencies in the late Asian trade.
Meanwhile, the RBI fixed the reference rate for the dollar at 67.1848 and euro at 74.8304.
In cross-currency trades, the rupee firmed up further against the pound sterling to finish at 89.31 from 89.52 on last Friday and also edged up further against the euro to 74.88 from 74.89.
The domestic currency moved up further against the Japanese yen to 65.58 per 100 yens from 65.67.
Meanwhile, domestic equity market remained in the green territory throughout. The 30-share Sensex ended higher by 133.85 points, or 0.49 per cent, at 27,278.76 — its highest closing since October 26 last year. .
PTI