The rupee trimmed its earlier gains, but was still quoting higher by 8 paise against the American currency on sustained bouts dollar selling from banks and exporters amid higher domestic equities.
The rupee resumed higher at Rs 66.99 against Friday's closing level of 67.05 at the Inter-bank Foreign exchange (forex) market.
It strengthened further at 66.8750 on good bouts of dollar selling from banks before quoting at 66.97 at 10:30 hrs.
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Sustained capital inflows supporting the rupee sentiment, a forex dealer said.
The dollar index was up 0.02% at 96.17 against a basket of six currencies in early trade.
Overseas, the US dollar steadied against its major rivals in early Asian trade following last week's large swings, as the market braced for Japanese and US central bank policy meetings that could provide investors with fresh incentive.
Meanwhile, the benchmark BSE Sensex was trading up by 186.83 points or 0.76% at 24,904.82 at 10:40 hours.