Rising for the fourth straight session, the rupee appreciated by 7 paise to close at 73.42 against the US dollar on Tuesday, amid heavy buying in domestic equities and unabated foreign fund inflows.
A weaker greenback in the overseas markets also supported the rupee, forex dealers said.
At the interbank forex market, the domestic unit opened at 73.42 against the US dollar and witnessed an intra-day high of 73.34 and a low of 73.44.
The local unit finally settled at 73.42 against the American currency, registering a rise of 7 paise over its previous close.
On Monday, the rupee had settled at 73.49 against the US dollar.
Equity benchmark indices Sensex and Nifty scaled fresh record highs on Tuesday, extending their bull run for the fifth straight session on the back of gains in banking and IT stocks.
The BSE gauge Sensex settled with gains of 259.33 points or 0.55 per cent at a new closing high of 47,613.08.