The US dollar nursed broad losses early on Tuesday, having come under pressure late in New York as investors bought the euro and drove the Australian dollar to its highest this year.
The partially convertible rupee trading at 60.50/51 per dollar at 0336 GMT, its strongest level since Aug. 12 and higher than its Monday's close of 60.77/78.
Overseas investors bought Indian shares worth 14.65 billion rupees ($240.9 million) and 10.56 billion rupees worth of index futures on Monday, when shares hit a record high, provisional exchange data showed.
Indian rupee up 23 paise against US dollar
(PTI) Extending its rising streak, the Indian rupee opened 23 paise up to trade at 60.54 against the US dollar today on heavy capital inflows.
Dealers said sustained selling of the American currency by banks and exporters also supported the rupee but a lower opening of the domestic equity market and dollar's rise against other currencies overseas, limited the gains.
The Indian rupee had appreciated by 12 paise in its previous session to close at an over six-and-a-half month closing peak of 60.77 against the US currency.
Meanwhile, the benchmark BSE Sensex fell 50.34 points, or 0.23 per cent, to trade at 22,005.14 in early trade today.