The rupee on Tuesday appreciated by 16 paise to settle at 74.46 against the US dollar as positive news on coronavirus vaccine boosted appeal for riskier assets.
Besides, a weak dollar overseas also supported the local unit.
At the interbank forex market, the domestic unit opened strong at 74.43 against the US dollar and later touched a high of 74.38 in day trade.
The local unit finally closed at 74.46 against the US dollar, registering a gain of 16 paise over its previous close. On Friday, the rupee had settled at 74.62 against the US dollar. Forex market was closed on Monday on account of Balipratipada.