The rupee was trading strong at 68.44 on increased selling of the US currency by exporters and banks.
Forex dealers said a strong domestic equity market and expectations of encouraging GDP data to be released later in the day also supported the rupee.
However, the dollar’s strength against some currencies overseas — following stronger-than-expected third-quarter US growth data, higher housing prices in September and a sharp rebound in consumer confidence in November — capped the gains.
The domestic unit opened flat at 68.65 at the Interbank Foreign Exchange market today. It hovered in a range of 68.65 and 68.41 before quoting at 68.44, up 21 paise at 4.40 pm local time.
Meanwhile, the BSE index rose 258.80 points or 0.98 per cent to 26,652.81, but was down 4.61 per cent this month.
The dollar edged up on Wednesday as US Treasury yields resumed their rise after three down days, with the greenback on track for its strongest performance against the yen in seven years.