The rupee gained 34 paise to Rs 49.94 against the American currency on the Interbank Foreign Exchange market in early trade on Friday on increased foreign fund inflows amid firm equity markets.
Dealers said besides increased foreign funds inflows, euro's gains against the US currency in the overseas market supported the rupee.
The rupee had close at 50.28/29 against the dollar in the previous session on Wednesday amid reports of Reserve Bank's intervention in the forex market.
The forex and money market were close on Thursday on account of Holi.
Meanwhile, the BSE benchmark Sensex rose by 310.70 points, or 1.81%, to 17,456.22 in early trade.