The rupee rallied sharply after resuming firm at 39.80/82 a dollar on heavy dollar sales by exporters and fairly good capital inflows into equity markets, forex dealers said.
It was quoted at 39.74/75 a dollar in late morning deals, stronger by 16 paise over previous close of 39.90/91 a dollar.
Fresh portfolio inflows after a gap of more than a month helped reduced dollar shortage even as the central bank pumped in sizeable chunk of funds to ease liquidity in the system.
Asian equity markets too remained strong with their indices ruling higher by about 1.0 to 3.5 per cent during morning trading.
The BSE benchmark Sensex was up 319 points or 1.79 per cent at 1030 hours on Wednesday.