The rupee strengthened by 7 paise to close at 73.38 against the US dollar on Monday, extending its gains for the second day on the back of firm Asian currencies and weak crude oil prices.
Forex dealers said inflows into Indian equities and firming Asian currencies against the dollar lent support to the local currency.
At the interbank forex market, the domestic unit opened at 73.43 and later rose to a high of 73.26 in the day trade.