Forex dealers said besides persistent dollar selling by exporters and banks, dollar's weakness against the euro amid a strong opening in the domestic equity market kept rupee strong.
Meanwhile, the BSE benchmark index Sensex recovered sharply by 181.41 points, or 0.98 per cent, to 18,760.91.
Euro rose against the dollar overseas as worries about the euro-zone eased after Spain unveiled economic reforms and budget plans that are expected to pave the way for a bailout.
The rupee had gained 49 paise yesterday to close at over 4-1/2-month high of 53.02 against the dollar on heavy selling of the American currency by exporters and some banks.
