The rupee trimmed early gains against dollar but was still trading higher by 31 paise at 55.63 a dollar on selling by banks and exporters amid persistent capital inflows.
Rupee strengthened despite dollar gaining against other currencies in the overseas forex markets.
The rupee resumed higher at 55.65 a dollar against last closing level of 55.94 at the Interbank Foreign Exchange (Forex) market. It moved between 55.52 and 55.69 per dollar, before quoting at 55.63 at 1040 hrs.
Fresh selling of dollars from banks and exporters in view of sustained capital inflows from foreign funds into equity market boosted the rupee value, a forex dealer said.
In New York, the dollar rose yesterday pushing the euro to its lowest since June 2010, as investors lost faith that central banks would supply more stimulus.
Meanwhile, the Indian benchmark Sensex was up 67 points, or 0.39%, at 1050 hrs.