The rupee on Tuesday strengthened by 15 paise to 54.34 against the dollar in early trade at the Interbank Foreign Exchange, on selling of the US currency by exporters and banks and strong capital inflows.
Besides a higher opening in the domestic equity market and continued capital inflows, strengthening of the euro against the dollar overseas also supported the rupee, forex dealers said.
The rupee had bounced back by 27 paise to end at one-week high of 54.49 against the US dollar on Monday as government delayed the implementation of controversial GAAR and a fall in wholesale inflation for December boosted rate cut hopes.
Meanwhile, the BSE benchmark Sensex breached the 20,000-mark for after two years but immediately slipped to trade 31.60 points, 0.16% higher at 19,938.01.