Indian rupee ended higher by 8 paise at 73.42 per dollar, amid buying seen in the domestic equity market.
It opened higher by 6 paise at 73.44 per dollar against previous close of 73.50 and remained in the range of 73.34-73.44.
At close, the Sensex was up 259.33 points or 0.55% at 47,613.08, and the Nifty was up 59.40 points or 0.43% at 13,932.60.
"Rupee to open around 73.48 and is expected to be volatile as today is expiry day and there is lot of open interest from the long side of USDINR. RBI was present at 73.50 yesterday and took the pair about 12 paise higher before selling took over," said Anil Kumar Bhansali, Head - Treasury, Finrex Treasury Advisors.
"For the day keeping a close watch on RBI, we would expect to sell the dollar on all major uptics. Importers can book near 73.30/40 for near term," he added.
The dollar languished near a 2-1/2-year low on Tuesday with demand for safe-havens flagging as U.S. lawmakers pushed forward with a COVID-19 relief package.Oil rose on Tuesday, for the third time in four sessions, on expectations for rising fuel demand as the United States may expand their pandemic aid payments and a final Brexit deal is set to stabilize trade between Europe and the UK.