Weakness of dollar in the overseas market also boosted the domestic currency, a forex dealer said.
The rupee today opened higher at 65.29 per dollar as against yesterday's level of 65.41 at the Interbank Foreign Exchange market and firmed up further to close at an 8-week high of 64.95, showing a gain of 46 paise or 0.70 per cent.
"Among day's major market moving events, Spot rates for Indian rupee against US dollar was seen trading close to Rs 65 per dollar in today's trade after FII inflows kept the rupee stronger. The rupee is seen at these levels for the first time after 14th August," said Hiren Dhakan, Associate Fund manager, Bonanza Portfolio.
The rupee had last ended at 64.78 per dollar on August 12, 2015. It hovered in the range of 65.3650 to 64.9500 per dollar during the day.
The dollar index was traded lower by 0.04 per cent in the late afternoon trade.
In Tokyo, the dollar was weaker against the yen in choppy Asia trade today, with some speculative players disappointed to see the Bank of Japan's decision to keep its monetary policy intact.
The dollar's weakness underscores increasing expectations among some short-term players who built up positions in anticipation of monetary easing by the central bank Wednesday, given Japan’s darkening economic outlook and low inflation.
But the central bank’s inaction prompted some to unwind their speculative positions, putting downward pressure on the US currency.