Forex traders said significant foreign fund inflows and easing crude oil prices also supported the local unit.
At the interbank foreign exchange market, the local unit opened at 82.22 against the US currency and moved between a high of 82.16 and a low of 82.29 in the day trade.
The local units settled at 82.21 (provisional), registering a gain of 10 paise over its previous close. On Monday, the rupee closed at 82.31 against the US currency.
The dollar index, which gauges the greenback’s strength against a basket of six currencies, fell 0.14 per cent to 102.28.
Global oil benchmark Brent crude futures fell 0.29 per cent to USD 75.01 per barrel.
A weaker greenback, strong foreign fund inflows and lower crude oil prices pushed the rupee higher after falling in the last three days, said Dilip Parmar, Research Analyst, HDFC Securities.
The local unit outperforms Asian currencies as the trade deficit narrows to a 21-month low.
Though the rupee outperformed among Asian currencies, the range remained narrow ahead of US debt ceiling talks. It is widely expected to see no compromise created and a continuation of the current uncertainty, making haven assets volatile.
In the near term, spot USDINR has resistance at 82.50 and support at 82.05.
On the domestic equity market front, the 30-share BSE Sensex declined 413.24 points or 0.66 per cent to end at 61,932.47 points, and the broader NSE Nifty fell 112.35 points or 0.61 per cent to 18,286.50 points.
Foreign Institutional Investors (FIIs) were net buyers in the capital market on Monday as they purchased shares worth Rs 1,685.29 crore, according to exchange data.
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