The Indian rupee on Friday strengthened by 7 paise to 46.57 a dollar against in early trade on hopes of fresh capital inflows into equity markets in line with firming trends on the Asian markets.
The dollar's losses against other regional currencies too supported the Indian rupee.
On Thursday, the rupee ended 11 paise lower at 46.64/65.
Dealers said expectations of capital inflows into domestic equities which may open higher in tandem with other Asian markets and dollar's weakness against other currencies, mainly supported the Indian rupee.
Asian markets were up almost 1.6 per cent in early trade.