Increased selling of the dollar by exporters amid sustained foreign capital inflows also supported the rupee, dealers said.
Besides early gains in domestic equity markets, the dollar's weakness against other Asian currencies overseas and the RBI's decision to keep key policy rates unchanged in its first bi-monthly monetary policy statement yesterday also helped rupee post gains, they added.
The rupee had gained 40 paise to close at an eight-month high of 59.91 against the dollar on Friday. Forex and money markets remained closed on Monday and Tuesday for Gudi Padwa and annual accounts closing.
Meanwhile, the benchmark BSE Sensex rose by 130.06 points, or 0.58 per cent, to hit a new record-high of 22,576.50 in opening trade.