The rupee jumped by 29 paise to close at 83.01 (provisional) against the US dollar on Friday following unabated foreign fund inflows and a record-breaking rally in domestic stocks.
Stock markets continued their record run with the benchmark BSE Sensex breaching the new milestone of 71,000. Heavy buying by foreign investors also boosted the rupee sentiment, forex dealers said.
At the interbank foreign exchange market, the rupee opened flat at 83.30 against the dollar. After touching the day's low of 83.32 in early trade, the rupee reversed the losses and surged to a high of 82.94.
The rupee finally closed at 83.03, up by 27 paise over the previous close of 83.30. On a weekly basis, the rupee gained 37 paise.
The US dollar index, which measures the greenback's strength against a basket of six currencies, was almost flat at 101.01.
The 10-year US Treasury yields fell below the 4 per cent level on Thursday following signals by the US Federal Reserve to cut rates next year. The yield had surged to 5 per cent in October, its highest level since 2007.
Brent crude futures, the global oil benchmark, rose 0.44 per cent to USD 76.94 per barrel.
Key equity indices surged to their new all-time high levels on Friday, with the Sensex breaching the historic 71,000 mark, amid bullish investors' sentiment due to favourable domestic macroeconomic data and rate cut hopes next year.
The 30-share BSE Sensex jumped 969.55 points or 1.37 per cent to settle at its record closing high of 71,483.75. The Nifty climbed 273.95 points or 1.29 per cent to settle at its new closing high of 21,456.65.
Foreign Institutional Investors (FIIs) were net buyers in the capital market on Thursday as they bought shares worth Rs 3,570.07 crore, according to exchange data.