The rupee on Friday recovered by 30 paise to 54.08 against the US dollar in early trade at the Interbank Foreign Exchange on increased capital inflows, amid weakening of the American currency against the euro overseas.
Forex dealers said besides dollar weakening against euro in overseas markets, higher opening in equity market and increased foreign funds inflows into the rising equity market mainly supported the rupee.
The government notified its decision to allow FDI in multi-brand retail sector, also influenced the rupee, they said.
The local unit on Thursday had depreciated by a hefty 37 paise to close at nearly one-week low of 54.38 on fresh dollar demand from importers and capital outflows from the stock market, amid political uncertainty.
Meanwhile, the BSE benchmark index Sensex recovered by 148.57 points, or 0.81%, to 18,497.82 in early trade.