The Indian rupee appreciated by 27 paise against the greenback in early trade on Wednesday following dollar selling by exporters amid fresh capital inflow on expectations of higher opening on the bourses in line with firming global equity markets.
However, dollar's strength against other major currencies caped gains in the Indian unit.
At the Interbank Foreign Exchange (Forex) market, the domestic currency traded stronger at 48.42 against the US currency, a rise of 27 paise over yesterday's close of 48.69/70 a dollar.
The rupee had lost 10 paise at 48.69/70 yesterday. Forex dealers said hopes of a firm opening of Indian stock markets in line with global equity markets supported the rupee.
Meanwhile, the Bombay Stock Exchange Sensex closed 60.33 points higher at 10,335.93 on Tuesday, Dow Jones Industrial Average gained 0.69 per cent higher, while London's FTSE rose by 1.25 per cent.
Among Asian markets, Japan's Nikkei was up 2.50 per cent while Singapore's Strait Times was up nearly 2 per cent in early trade on Wednesday.