Sustained dollar sales by exporters and banks and a higher opening in the equity market also boosted the rupee sentiment, forex dealers said.
However, dollar's gains against the euro overseas backed by fresh concerns over Greece, capped the gains, he added.
The local currency had ended 10 paise higher at 53.70 against the dollar yesterday on following firm local stock markets and capital inflows.
Meanwhile, the BSE benchmark index Sensex rose by 160.74 points, or 0.87 per cent, to 18,722.44 in early trade today.