The local unit resumed higher at 53.61 per dollar as against the last closing level of 53.77 per dollar at the Interbank Foreign Exchange (Forex) Market and firmed up further to 53.38 per dollar before quoting at 53.54 per dollar at 1040 hrs.
Banks and exporters preferred to reduce their dollar position in view of sustained capital inflows from foreign funds into equity market.
Foreign institutional investors (FIIs) bought shares worth a net Rs 842.95 crs yesterday as per provisional data from the stock exchanges.
The BSE benchmark Sensex rose by 49 points, or 0.24 per cent, to 20,149.91 at 1055 hrs.
In overseas market, the US dollar held steady yesterday against most major currencies and the yen rebounded from a two-year low as the Bank of Japan began a two-day policy meeting.
