Extending early gains against the US dollar, the Indian rupee was up by 43 paise against the American currency at the Interbank Foreign Exchange on Wednesday on persistent foreign capital inflows into domestic equities and dollar selling by banks and exporters.
The domestic unit opened higher at 44.40/41 per dollar as against the overnight closing level of 44.68/69 per dollar in the forex market.
It later moved up further to 44.25, but was being quoted slightly lower at 44.32/33 at 1030 hours.
Forex dealers said banks and exporters preferred to reduce their dollar position in view of persistent capital inflows from foreign funds.
The dollar fell to a six-month low against the euro and lost ground against the Japanese Yen in New York on Tuesday after the Bank Of Japan unexpectedly cut rates.
Meanwhile, the Indian benchmark Sensex recovered sharply after suffering a 68-point loss in Tuesday's session, surging by 155 points in early trade on Wednesday.