The rupee trimmed its initial gains but was still quoted higher by 32 paise to 61.09 per US dollar in early trade today on persistent selling of the American currency by banks and exporters on hopes of more foreign capital inflows amidst a strong equity market.
Bankers and exporters preferred to reduce their dollar position as the equity market soared on strong performance of BJP in Assembly polls.
The rupee resumed higher at 60.90 per dollar as against the last weekend's level of 61.41 at the Interbank Foreign Exchange (Forex) Market. However, it trimmed initial gains and was quoted at 61.09 per US dollar at 1040 hrs.
The domestic unit hovered in a range of 60.90-61.13 per US dollar during the morning deals.
In New York, the US dollar briefly rallied on last Friday after better than expected US jobs data, but it quickly gave back much of its gains on expectations that Federal Reserve bond-buying stimulus would continue into the next year.
Meanwhile, the BSE benchmark Sensex rose by 311.29 points, or 1.48 per cent, to quote at 21,307.82 at 1045 hrs.
Rupee vs dollar: early trade
Extending its rising streak for the fourth straight day, the rupee appreciated by 51 paise to trade at nearly four-month high of 60.90 against the dollar in early trade today on sales of the US currency by banks and exporters and sustained foreign capital inflows.
Besides, a higher opening in the domestic equity market, where the Sensex soared to an all-time high of 21,483.74 points after BJP's victory in state Assembly elections and strengthening of other currencies against the dollar overseas, also supported the local currency, forex dealers said.
The rupee had gained 34 paise to close at five-week high of 61.41 against the dollar on Friday.