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The rupee recovered by 26 paise to 66.39 against the dollar at the Interbank Foreign Exchange in early trade today on fresh selling of the US currency by banks and exporters.
Dealers said fresh selling of the US currency by exporters and banks, and weakening of dollar overseas supported the domestic currency.
Gains in stock markets also helped rupee strengthen against the dollar, they added.
The rupee had tumbled sharply by 82 paise, its biggest single day fall this year, to settle at 66.65 against the dollar yesterday as global meltdown fears remained unabated.
The widespread panic sell-off in Chinese equities predominantly tipped emerging market currencies into turmoil even as the US dollar weakened overseas.
Meanwhile, the benchmark BSE Sensex today regained the 26,000-mark by rebounding 383.27 points, or 1.48%, to trade at 26,124.83 in opening trade.
