Dealers said that a sluggish dollar overseas boosted the rupee sentiment.
Sustained sale of dollars by exporters and some banks too aided the rupee rise, they added.
The Bombay Stock Exchange benchmark Sensex on Wednesday rose by 105.53 points or 0.57 per cent after gaining over 271 points or 1.49 per cent on Tuesday, which mainly supported the rupee rise.
Foreign Institutional Investors (FIIs) pumped in USD 632.45 million in firming equities in four trading sessions since May 26.
Alpari Forex (India) CEO Pramit Brahmbhatt said: "GBP & Euros gain aided the rupee to trade stronger against the US dollar, local equities also traded positively & closed up by more than half per cent".
"Looking at the weak dollar one can expect Rupee to gain against greenback and the trading range for the USD/INR will be 44.60 to 45.10 tomorrow," he added.
At the Interbank Foreign Exchange (Forex) market, the local currency commenced higher at 44.99/45.00 a dollar from previous close of 45.06/07.
It later moved in a range of 45.05 and 44.77 before settling the day at 44.84/85, a rise of 0.49 per cent.
Dollar index, consisting of six major currencies, was trading lower in European market on Wednesday.