The rupee rose by 10 paise to Rs 72.49 against the dollar in early trade Friday amid fresh selling of the American currency by exporters and banks.
Forex dealers said, apart from weakness in the dollar against some currencies overseas despite upbeat US economic data, fresh foreign fund inflows supported the rupee.
According to the provisional exchange data, FPIs invested Rs 552.44 crore on a net basis in equities on Thursday.
A higher opening of the stock market also supported the rupee, a dealer said.
The benchmark BSE Sensex recovered by 181.95 points, or 0.50 per cent, to 36,506.12 in early trade on Friday.
The rupee Thursday ended almost flat at Rs 72.59 against the US dollar after strong initial gains were erased by fag-end dollar demand from importers despite government measures to stem currency volatility.