The rupee firmed up by 37 paise to 62.50 in morning deals on Monday on selling of dollars by banks and exporters on hopes of foreign capital inflows in view of a sharp recovery in the equity market.
The rupee resumed higher at 62.67 per dollar as against the previous close of 62.87 at the Interbank Foreign Exchange (Forex) Market.
It shot up further to 62.45 before quoting 62.50 per dollar at 1040 hours, hovering in a range of 62.45 and 62.70 per dollar.
Banks and exporters reduced their dollar positions on expectation of more foreign fund inflows into the equity market.
The benchmark Sensex rose 263.76 points, or 1.30%, to 20,481.15 at 1045 hours.
In the global market, crude oil futures traded sharply lower as markets reacted to a deal between Iran and major world powers that could head off further sanctions on Iranian crude.
WTI crude for January delivery fell 77 cents to $94.07 a barrel.