The rupee appreciated further by 11 paise to 66.80 against the American currency in late morning deals on sustained bouts of dollar selling by exporters and banks amid rallying domestic equities.
The rupee opened higher at 66.85 per dollar from yesterday's closing level of 66.91 at the Inter-bank Foreign Exchange (Forex) market.
It moved between 66.89 and 66.80 during morning deals and was still quoting 66.80 at 1030 hrs.
Meanwhile, the dollar index was trading down 0.03 per cent at 95.75 against a basket of six currencies in early trade.
Overseas, the US dollar held steady against its major rivals in early trade with its near-term fortunes riding on whether US jobs data will rekindle expectations for the Federal Reserve to raise interest rates this year.
While, the British pound weakened a day after the Bank of England not only cut interest rates but also restarted its bond purchase programme to shore up the economy.
Meanwhile, the benchmark BSE Sensex was trading higher by 285.04 points, or 1.03 per cent, to 27,999.41 at 1050 hrs.
Meanwhile, foreign funds sold shares worth Rs 800.71
crore yesterday, as per the provisional data.
Domestic equities staged a resounding comeback after a three-day lacklustre trading activity on the back of frantic buying across-the-board even highly bullish Asian cues provided much needed support to this relief rally.
All major Asian bourses rallied for an eighth straight day, tracking gains on Wall Street and an overnight bounce in oil prices.
The benchmark Sensex zoomed 245.11 points to close at 26,878.24, while the broader Nifty jumped over 83 points to 8,273.80.
In the forward market, premium for dollar turned marginally weak due to lack of market moving factors.
The benchmark six-month premium for June softened to 145-146 paise from 145-147 paise and the far-forward December 2017 contract inched down to 284.5-285.5 from 284.5-286.5 paise yesterday.
On the global commodity front, crude oil prices maintained its surge on renewed confidence that oil producers would stick to their pledge for oil cuts after state-owned Kuwait Petroleum Corp said that it is committed curbing output.
