The rupee rose by 37 paise to Rs 59.82 against the dollar in early trade on the Interbank Foreign Exchange on Friday, extending Thursday's recovery on increased dollar selling by banks and exporters, and strong domestic equity market.
However, month-end demand from oil importers for the American currency limited gains.
Selling of dollars by exporters and some banks coupled with a higher opening in the equity market supported the local unit, traders said.
Euro's gain against the American currency overseas also supported the rupee, they said.
The BSE Sensex spurted by 292.94 points, or 1.55%, to trade above 19,000-point level at 19,168.89 in early trade on Friday.
The rupee had strengthened by 53 paise to close at Rs 60.19 per dollar on Thursday after the current account gap moderated sharply.