Strong foreign fund inflows and a firming trend in local equities largely backed up the momentum.
Unwinding of dollar short positions by speculative traders ahead of the much awaited healthcare bill by US President Donald Trump further supported the home currency, a forex trader said.
Domestic equities gained further, charged by frantic buying in key banking stocks after Finance Minister Arun Jaitley promised a solution to tackle non-performing assets (NPAs) within the next few days.
Foreign portfolio investors (FPIs) bought shares worth a net Rs 1,094.44 crore yesterday, as per stock exchanges data.
The home currency resumed higher at 65.48 as compared to Thursday's closing value of 65.52 at the Interbank Foreign Exchange (Forex) market on renewed dollar selling.
It maintained a steady uptrend throughout the day and touched an intra-day high of 65.38 in late afternoon deals before ending at 65.41, showing a smart gain of 11 paise, or 0.17 per cent.
The Indian unit had depreciated by 22 paise in the last two days.
The RBI, meanwhile, fixed the reference rate for the dollar at 65.4581 and for the euro at 70.4656.
On the global front, the US dollar roared higher in Asian trade, gaining ground from a two-month low against all of its G-10 counterparts ahead of healthcare vote amid hardening Fed policy bets.
The Euro also got a boost in London trading following surprisingly strong Eurozone PMI readings which showed business activity in the region at a six-year high.
The US dollar index, which measures the greenback's strength against a trade-weighted basket of six major currencies, traded little changed at 99.55.
In cross-currency trade, the rupee also bounced back against the British pound and finished higher at 81.68 from 81.90 per pound and recouped against the Japanese Yen to end 58.90 per 100 yens compared with 59.01 yesterday.
However, the local unit ended steady against the euro at 70.66.
In the forward market, premium for dollar displayed a lacklustre trend in the absence of necessary buying support.
The benchmark six-month premium for August softened to 134-136 paise from 135-137 paise, while the far-forward February 2018 contract ended virtually steady at 284-286 paise.
On the global commodity front, crude maintained its small gains, holding above a four-month low amid growing concerns that OPEC's pledge to reduce global inventories was encouraging the US to boost production.
Brent crude, the global oil benchmark, rose to $50.94 a barrel on London's ICE Futures exchange.
(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)