Mumbai, Dec 1 (IANS): The rupee strengthened on Tuesday on the back of weakness in the dollar index and heavy inflow of foreign institutional investments (FIIs).

Currently, the rupee is trading at Rs 73.51 per dollar, appreciating around 54 paise from its previous close of Rs 74.05 per dollar. It had opened at Rs 73.95 per dollar.

On Friday, the Indian currency snapped its five-day gaining streak and settled by appreciating 17 paise at Rs 74.05 against the greenback.

The GDP data for the July-September showed better than anticipated narrowing of the contraction in GDP, which has boosted the market participants on Tuesday.

The National Statistical Office (NSO) data on Friday showed that the Q2FY21 GDP on a year-on-year basis contracted by 7.5 per cent from 23.9 per cent contraction in the preceding quarter.

The recent inflow of FIIs has also boosted investor sentiments. FIIs were net positive in November with net purchasing of over Rs 65,000 crore, the highest monthly inflow ever.

The domestic stock market also traded in the green on Tuesday on the back of improving macro data and continued inflow of FIIs.