The rupee strengthened by 18 paise against the US currency in early trade on Friday on dollar selling by banks and expectations of capital inflows amid firm equity markets.
At the Interbank Foreign Exchange (Forex) market, the domestic unit was quoted 18 paise higher at 50.20 a dollar, the highest since February 26.
Dealers said hopes of increased capital inflows from foreign funds into the domestic stock markets, supported the rupee.
Some dollar selling by banks and the greenback’s weakness against other major currencies also helped the domestic currency strengthen, they added.
On Thursday, the rupee rose the most this year by 92 paise to 50.38/50.39 a dollar.
Rupee has gained almost 3.60 per cent from record low of 52.20 a dollar, hit earlier this month, mostly on the back of rebound on the stock markets.