Continuing its strength for the third day, the Indian rupee improved further by 5 paise against the US currency on Thursday in early trade, boosted by stocks rally and dollar selling by banks and exporters.
In lackluster activity at the Interbank Foreign Exchange (Forex) market, the domestic currency traded slightly higher at 48.86 against the US currency, an appreciation of 5 paise over the previous close of 48.91/93 a dollar.
On Wednesday, the rupee gained 3 paise to close at 48.91/93 a dollar.
Forex dealers said hopes of increased capital inflows by funds following rally in stock prices on the domestic bourses and dollar selling by banks mainly supported the rupee.
They said, however, dollar's mixed trend against other major currencies, capped rise in the rupee gains.
Among Asian markets, Hong Kong's Hang Seng climbed 5.9 per cent, while Japan's Nikkei gained 1.66 per cent in early trade. The BSE Sensex closed 2.81 per cent higher on Wednesday.