The Indian rupee on Tuesday appreciated by 26 paise to quote at 48.82 against the US dollar in early trade on expectations of increasced capital inflow by foreign funds on hopes that the stock markets may open strong, in line with other Asian bourses.
The US dollar's losses against some other currencies also supported the rupee.
At the Interbank Foreign Exchange (forex) market, the domestic currency gained 26 paise to trade higher at 48.82 over Tuesday's close of 49.08/09.
Yesterday, the local unit ended 8 paise down at 49.08/09 against the American currency.
Forex dealers said anticipation of the markets to open strong and exporters' dollar selling, buoyed the rupee sentiment.
Meanwhile, Asian stock markets were trading over two per cent higher in morning trade on Tuesday.