The Rupee failed to maintain initial gains, but was still quoted higher by 18 paise to 54.50 per dollar on bouts of buying and selling transactions from banks and exporters.
The rupee resumed higher at 54.42 per dollar as against the yesterday's closing level of 54.68 at the Interbank Foreign Exchange (Forex) Market and moved up further to 54.31.
However, it failed to maintain its initial gains and dropped to 54.54 per dollar before quoting 54.50 at 1050 hrs on renewed demand for the US currency.
The rupee moved in a range of 54.31 and 54.54 per dollar during the morning deals.
Persistent foreign capital inflows into equity market are still supporting the rupee sentiment, a dealer said.
Meanwhile, the Indian benchmark BSE-30 index, Sensex, rose by 150.80 points, or 0.77 per cent, to 19,731.61 at 1100 hrs.
In the overseas market, the dollar ruled strong against the other currencies as US lawmakers passed a bill to avoid the "fiscal cliff," bolstering investors' appetite for risky assets.