Weak dollar overseas along with abundant capital inflows supplemented further strength to the local currency.
Forex dealers pointed to the recent improvement in sentiment as the impetus for the renewed vigour.
Massive capital inflows on hopes of more reform measures following BJP's strong showing in the recently held state elections spurred the rupee's biggest rally last week since early 2015.
Robust domestic macro fundamentals including 7 per cent GDP growth and a rebound in industrial production along with lesser-than-anticipated hawkish monetary policy stance too reflected in the strong rallying momentum.
The much-anticipated turnaround on the economic front has opened up a barrage of foreign capital fund flows into India.
Foreign investors pumped in $3.4 billion in the capital markets so far this month, while country's foreign exchange reserves nudged up $98.6 million in the week ended March 10.
Moreover, there is also an expectation that the government will relax FDI policy norms in more sectors to attract more funds and generating jobs.
Meanwhile, The Union Cabinet today approved four legislations to implement the Goods and Services Tax (GST), ahead of their introduction in Parliament this week to enable roll out of the tax reform from July 1.
The local currency resumed higher at 65.40 as compared to weekend close of 65.46 at the Interbank Foreign Exchange (forex) market.
But, it soon succumbed to fresh dollar pressure and retreated to touch a low of 65.47 briefly in mid-morning deals.
However, overcoming the initial volatility, the home unit staged a smart rebound to touch a high of 65.30 before ending at 65.36, showing a gain of 10 paise, or 0.15 per cent.
It had lost 5 paise to end at 65.46 against the US currency on last Friday.
The RBI, meanwhile fixed the reference rate for the dollar at 65.3827 and for the euro at 70.3779.
Globally, the greenback continued its downward spiral across the board for the fourth day running against basket of currencies in knee-jerk reaction to a G20 summit outcome.
The US dollar index, which measures the greenback's strength against a trade-weighted basket of six major currencies, was trading lower at 100.12 after breaching 100-mark once again.
In cross-currency trade, the rupee remained under immense pressure against the British pound and finished at 81.12 from 80.88 and also dropped further against the Japanese Yen to end at 57.91 per 100 yens compared to 57.85 last Friday.
The domestic unit, however, held steady against the euro 70.29.
Meanwhile, domestic stocks witnessed fresh round of profit-taking after last week's spectacular rally as software stocks remained under pressure on worries about a stronger rupee.
Subdued Asian stocks in the midst of renewed worries about the health of global free trade also weighed on trade.
The flagship Sensex slumped 130.25 points to close at 29,518.74, while broader Nifty dropped 33.20 points to finish at 9,126.85.
In the forward market, premium for dollar displayed a lacklustre trade in absence of any major buying activity.
The benchmark six-month premium for August was quoted soft at 143-145 paise from 143.25-145 paise and the far-forward February 2018 contract eased to 295-297 paise from 296-297 paise last weekend.
On the global commodity front, crude prices plunged sharply by more than 1 per cent on Monday as investors made record cuts to bets on rising prices after strong drilling data from the United States rekindled concerns about the effectiveness of OPEC-led production cuts to curb a supply glut.
(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)