The rupee was trading strong at 66.84 in the evening session due to dollar selling by banks and exporters and dollar's weakness against other currencies overseas.
However, a weak domestic equity market restricted the rupee's gains.
The domestic unit opened strong by at 66.84 against the previous close of 66.89 at the Interbank Foreign Exchange market today.
It hovered in a range of 66.92 and 66.80 before quoting at 66.84, up 5 paise at 4.45 pm local time.
In the overseas market, the dollar hit a one-month low against the yen on Tuesday, staying on the defensive after recent US economic data were seen likely to limit the prospects of a near-term Fed interest rate hike.
The dollar slid 0.8 per cent to 100.43 yen and touched a low of 100.355 yen at one point, the greenback's lowest level against the yen in more than a month.
Meanwhile, the BSE index fell 87.79 points or 0.31 per cent to 28,064.61, after declining as much as 0.75 per cent earlier in the session.