Extending its gains for the third straight day, the Indian rupee on Friday appreciated by seven paise to 49.85 against the US currency in early trade owing to increased capital inflows by foreign funds on expectations that the domestic bourses may open in the positive zone, tracking other Asian equity markets.
Dollar's weakness against other Asian currencies also supported the rupee, dealers said. At the Interbank Foreign Exchange (Forex) market, the domestic unit was quoted higher at 49.85 a dollar, up by seven paise over the previous close of 49.92/94.
Forex dealers said firming Asian stock markets led to capital inflows by foreign funds, supporting the rupee movement.
Yesterday, the rupee gained the most in almost one month by rising 42 paise to 49.92/94 against the USD.
Meanwhile, the BSE benchmark Sensex yesterday closed 2.94 per cent higher, while Hong Kong's Hang Seng index moved up by 0.14 per cent in early trade today.