The rupee closed on Thursday marginally higher than the previous session's 12-week low, helped by dollar inflows from foreign funds investing in local stocks. The partially convertible rupee closed at 43.71/7150 a dollar, stronger than Wednesday's 43.7325/7375.
The benchmark BSE index rose 0.6 percent after falling for five straight sessions as foreign funds bought at lower levels, betting on growth prospects in Asia's third-largest economy.
Foreign funds sold shares worth a net $25.4 million on Wednesday, as the market fell, though they have bought nearly $770 million worth this month.
Dealers said demand from oil firms as crude prices hit new highs checked the rupee's gains. Oil surged to $68 a barrel, hit by supply concerns due to a growing threat to oil facilities from an Atlantic storm and a large fall in US gasoline stocks.