The rupee trimmed its initial gainsagainst the US currency, but was quoted still up by five paise to 61.14 on selling of the dollar by banks and exporters.
Banks and exporters preferred to reduce their dollar position in view of persistent foreign capital inflows into the equity market.
The rupee resumed higher at 61.07 per dollar as against the last closing level of 61.19 per dollar at the Interbank Foreign Exchange (Forex) Market. It hovered in a range of 61.06 per dollar and 61.16 per dollar before quoting at 61.14 at 1000 hrs.
In New York market, the US dollar fell against the Australian unit on Tuesday after its central bank suggested rates would remain steady for some time, while investors looked ahead to guidance on US interest rates at the close of the two-day Federal Reserve meeting.
Meanwhile, the BSE benchmark index Sensex declined by 24.11 points or 0.11% to 21,808.50 at 1000 hrs.