The rupee strengthened to its highest in two years amid heavy selling of dollars by foreign banks as markets awaited the central bank's decision on interest rates later on Wednesday.
The rupee rose to as much as 63.7575 per dollar, its strongest level since Aug. 10, 2015, from its close of 64.
0750 on Tuesday. Traders estimated foreign banks had sold around $1 billion worth of dollars.
The gain in the partially convertible currency was magnified as the Reserve Bank of India refrained from its usual intervention, traders added.