The rupee resumed higher at 53.68 per dollar as against yesterday closing level of 53.81 at the Interbank Foreign Exchange (Forex) Market and moved up further to 53.66.
However, it failed to maintain initial gains on some dollar demand from banks and was quoted at 53.79 per dollar at 1040 hrs.
It moved in a range of 53.66-53.90 during the morning deals.
Sustained capital inflows from foreign funds into equity market, mainly boosted the value against the dollar, forex dealers said.
The BSE benchmark Sensex firmed up by 45 points, or 0.23 per cent, to 20,026.65 in the late morning trade.
In the New York market, the Japanese yen jumped against the US dollar yesterday as investors learnt that planned asset purchases by the Bank of Japan will start later than anticipated.
The greenback also lost ground against the euro following a better-than-expected survey of German sentiment.
