The rupee ended 7 paise stronger at 62.06 against the dollar on persistent inflows into the domestic equtiy markets.
Foreign inflows helped the BSE-benchmark Sensex end at a one-month high of 20,811.44 points, higher by 110.69 points (0.53 per cent) over the previous close.
The rupee has been supported by inflows into equities and debt this month, despite concerns of a faster withdrawal of the US central bank's monetary stimulus.
However, reiterating his earlier stance, the RBI governor said the Indian economy is well placed to weather the financial crisis.
The domestic currency opened flat from Friday's close of 62.13 per dollar. The rupee moved in the 62.15 to 61.95 per dollar range during the day.
Call Rates, Bond prices drop
The inter-bank call money rate, the rate at which banks borrow money from each other to meet short-term requirements, ended weaker at 7.70 per cent from Friday's close of 8.25 per cent.
Yield on the 10-year benchmark 8.83 per cent Government security, maturing in 2023, hardened to 8.88 per cent from its previous close of 8.79 per cent. Bond prices fell to Rs 99.62 from Rs100.20. Bond prices and yields move in the opposite direction