The domestic unit opened substantially higher at 64.49 from Tuesday's closing of 64.63 at the Interbank Foreign Exchange market.
Maintaining its strong edge over the greenback, the rupee touched a fresh intra-day high of 64.3350 in late afternoon deals before ending at 64.38, showing a smart gain of 25 paise or 0.39 per cent. Today's gain was the biggest single-day rise for the rupee since April 13.
It touched a low of 64.5750 briefly during the trade.
In the previous trading session on Tuesday, the rupee tumbled 32 paise to end at a fresh three-week low of 64.63 against the resurgent dollar.
Healthy FII inflows into equities and debt also supported the recovery momentum.
The overall forex market sentiment was high on expectation of good monsoon reviving rural demand, soft interest rates and strong lending growth for the region's third largest economy.
The Indian Meteorological Department (IMD) on Wednesday said monsoon rainfall will be higher than earlier forecast, which would give a booster dose to the rural economy.
Foreign funds bought local shares worth net Rs 893.36 crore on Wednesday after recent spell of selling, according to provisional figures by stock exchanges.
The Reserve Bank of India (RBI), meanwhile, fixed the reference rate for the dollar at 64.4380 and for the euro at 70.1472.
In cross-currency trades, the rupee ended higher against the pound sterling at 82.97 from 83.52 per pound and rose against the Euro to settle at 69.97 as compared to 70.38.
The domestic unit also climbed against the Japanese Yen to finish at 56.45 per 100 yens from 56.79 previously.
In worldwide trade, the US dollar traded marginally higher against major rivals ahead of BOE rate outcome.
Meanwhile, the Bank of England releases today its interest rate and monetary policy decisions.
The dollar index, which tracks the US currency against a basket of six major rivals, was up 0.23 per cent at 99.73.
In forward market today, premium for dollar dropped further on good receivings from exporters.
The benchmark six-month premium payable in October slipped to 147-149 paise from its previous level of 150.50- 151.50 paise and far-forward April 2018 contract also fell to 303-305 paise from Tuesday's closing level of 307-309 paise.
In the international commodity front, crude prices regained its strength following a sharp decline in US inventory. Lifted the otherwise mixed stock market.
The front-month WTI crude contract rebounded to trade at a 1-week high of 47.78 in early Asian trade.
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