In active trade at the interbank foreign exchange (forex) market, the local currency resumed firm at 41.09/11 from overnight close of 41.09/11 and later surged to 41.0450/0550 per dollar in late morning deals.
The benchmark Sensex surged further by about 67.40 points during morning trade to touch 15,189.41, gaining more than 1,000 points since August 24.
The weak dollar overseas markets also aided the rupee sentiment.
The rupee also drew support from petering out dollar demand. Oil refiners were consistent buyers in the greenback in the last few days to meet their month-end payments.
Forex dealers said firm equity markets and weak dollar overseas were the main factors working in favour of rupee.
Dollar's weakness in international markets was attributed to indications of a possible interest rate cut.