The rupee appreciated 26 paise to close at 79.65 (provisional) against the US dollar on Thursday, tracking a firm trend in the domestic equities.
At the interbank forex market, the local unit opened at 79.80 against the greenback and finally settled at 79.65 (provisional), registering a rise of 26 paise over its previous close.
During the session, the local unit witnessed an intra-day high of 79.64 and a low of 79.85 against the American currency.
On Wednesday, the rupee declined 13 paise to close at 79.91 against the US dollar.
The dollar index, which measures the greenback's strength against a basket of six currencies, was up 0.12 per cent at 106.58.
Brent crude futures, the global oil benchmark, rose 1.37 per cent to $108.08 per barrel.
"Rupee traded positive on the back of positive capital markets and negative dollar reaction after Fed's 0.75 bps hike with a data-driven further stance from Fed chair Powell," said Jateen Trivedi, VP Research Analyst at LKP Securities.
Trivedi further said that "higher crude prices kept gains limited in rupee. Going ahead route can be seen in the range of 79.50-79.95".
On the domestic equity market front, the BSE Sensex ended 1,041.47 points or 1.87 per cent higher at 56,857.79, while the broader NSE Nifty jumped 287.80 points or 1.73 per cent to 16,929.60.
Foreign institutional investors remained net sellers in the capital market on Wednesday, offloading shares worth Rs 436.81 crore, as per exchange data.