The rupee on Wednesday gained 16 paise to 55.41 against the US dollar in early trade, extending its rising streak for the third straight session at the Interbank Foreign Exchange as the American currency weakened against euro overseas.
Dollar selling by exporters and banks also supported the rupee, dealers said.
Euro rose to a seven-week high against the American currency overseas on easing euro-zone worries on hopes that the European Central Bank will act to rein in surging borrowing costs, they added.
The local currency had gained 16 paise to close at one-week high of 55.57 against the dollar on Tuesday in line with firm equities amid sustained selling of the American currency by exporters.
Meanwhile, the BSE benchmark index Sensex fell by 84.97 points, or 0.47%, to 17,800.29 in early trade on Wednesday.