The rupee closed stronger at 55.07 against the dollar because of strong FII inflows and stronger euro.
"There was a strong inflow into the markets and some big corporates, including a large telecom company and an leading engineering company, sold dollars which helped the rupee to gain,” a chief dealer with a public sector bank said.
He said that the euro is also strong at this point. "So, the rupee is also tracking the euro.'' The euro was trading at 1.2430 against the dollar at 5.20 pm India time.
The domestic unit opened higher at 55.32 against the greenback after Finance Minister P. Chidambaram signalled possible action to stimulate the economy.
The rupee, which has largely tracked the euro, will be buoyed by some action on the domestic front.
“A few good actions from the government can quickly turn the sentiment in favour of the rupee...it will appreciate to the 52/dollar level within four weeks,” a top official from a foreign bank said.
Call rates, G-Secs gain
The interbank call rates closed slightly higher at 8.05 per cent. It had closed at 8 per cent on Monday.
The 8.15 per cent government security, which matures in 2022, closed higher at Rs 99.99 (yield: 8.15 per cent). It had closed at Rs 99.50 (yield: 8.22 per cent).