The rupee had settled at 67.07 against the dollar yesterday, up by 56 paise over the previous day's close.
Traders said dollar selling by exporters and banks and fresh measures announced by new RBI Governor Raghuram Rajan to curb the rupee's slide helped domestic currency recover.
The dollar's weakness against other currencies overseass also supported the rupee's sentiment, they said.
Meanwhile, stock markets were up by over 2 per cent in early trade.
The new RBI governor yesterday announced measures, such as liberalisation of the financial market by enhancing the limits for exporters to re-book cancelled forward exchange contracts and opening a special concessional window for swapping foreign currency non-resident (FCNR) deposits and dollar funds, to support the rupee.