Snapping its two-day losing streak, the rupee recovered by 9 paise at 64.04 against the US dollar on fresh selling of the greenback by banks and exporters on hopes of fresh foreign capital inflows into equity markets.
The rupee opened higher at 64.01 as against last weekend's level of 64.13 at the Interbank Foreign Exchange market and hovered in a range of 63.92 and 64.07 before concluding at 64.04, showing a gain of 9 paise, or 0.14 per cent.
The local currency had lost 22 paise, or 0.34 per cent, in the previous two days.
Meanwhile, the benchmark BSE Sensex continued to rule firm for the fourth consecutive day, surging by 73 points to close at 28,187.06, on persistent buying from investors on hopes of rate cut from Reserve Bank of India on Tuesday.
The dollar index was up by 0.24 per cent against a basket of six currencies in late afternoon trade.
In the overseas market, the dollar finished with monthly gains against most of its rivals.
Its strong performance in July followed a weak showing in June, when the dollar finished the month lower against other major currencies.
It finished the month up 1.4 per cent against the euro, its best monthly performance since May.
Oil prices fell in Asia on Monday on persistent concerns about the global supply glut after the OPEC cartel's indication that it will not budge from its current lofty output levels, analysts said.
