The rupee appreciated by 24 paise to 46.16 a $ in early trade on dollar sell-off by banks and exporters, and fresh foreign fund flows into equity markets.
Dealers said $ selling by banks and exporters and increased capital inflows into equities by foreign funds provided support to the rupee.
The US currency weakened against the Japanese yen in morning trade which supported the rupee sentiment, they added. Also the $ fell to three-month low against a basket of major currencies on concerns over the US economic recovery.
Meanwhile, the Bombay Stock Exchange index Sensex rose by 171.69 points, or 0.83 per cent, to 18,039.98 points in the opening trade.
The rupee had gained 13 paise to close at a one-month high of 46.40./41 against the dollar in previous session on Friday.