The local currency touched 94.51 against the dollar during early trading before surrendering some of its gains to settle at 94.63 per dollar, representing a 0.1 per cent appreciation on the day.
The dollar's decline followed early results from the United States midterm elections, which showed significant gains by Democrats in their bid to take control of Congress from President Donald Trump's Republican Party.
Democrats secured majorities in both the Senate and House of Representatives on Tuesday, recording sweeping victories in several traditionally Republican strongholds. The outcome was widely viewed as a setback for Trump, whose administration faced a strong electoral rebuke from voters.
Market analysts said the possibility of increased political gridlock in Washington could limit expectations of further fiscal expansion by the US government, putting downward pressure on American bond yields and the dollar.
In a note, MUFG said: "A Democratic sweep of both the House and Senate would likely be modestly positive for Asian FX, as stronger fiscal gridlock would reduce expectations for further US fiscal expansion, weighing on US yields and the USD."
The greenback fell 0.3 per cent against a basket of six major international currencies, providing support for several Asian currencies, which recorded gains ranging between 0.1 and 0.3 per cent.
However, concerns over the possibility of stricter regulatory oversight of artificial intelligence-related data centres weighed on regional equity markets. Stocks in South Korea and Taiwan declined between 1.5 and two per cent as investors assessed the potential implications for technology companies.
Indian equities, by contrast, recorded modest gains, placing the country's stock market among the better performers in the region, alongside Vietnamese shares.
The decline in global oil prices also provided additional support for the rupee, particularly as lower crude costs could help ease India's import-related dollar demand.
Despite the positive developments, traders said demand for dollars from local importers at more favourable rupee exchange rates limited the currency's immediate gains.
Another factor supporting the rupee was an apparent improvement in foreign portfolio investment flows into Indian equities.
Data from stock depositories showed that overseas investors purchased approximately $1 billion worth of Indian shares in November so far, signalling a possible reversal after two consecutive months of net selling.
The renewed foreign buying has improved market sentiment towards Indian assets, offering additional support to the rupee as investors assess developments in the global currency market and the broader economic outlook.