The rupee appreciated by 11 paise to 66.20 against the US dollar in early trade today on increased selling of the American currency by exporters.
Besides, weakness in dollar against other currencies overseas ahead of the US retail data supported the domestic unit, forex dealers said.
They, however, said a lower opening of the domestic equity markets, disappointing IIP numbers and rising retail inflation, capped the rupee's gain.
The rupee had gained 13 paise to close at 66.31 against the US dollar at the Interbank Foreign Exchange market on Tuesday.
Forex market remained closed on Wednesday and Thursday on account of "Diwali Balipratipada'.
The benchmark BSE Sensex dropped by 228.41 points or 0.88 per cent to 25,638.54 in early trade.
Spotted: Virat Kohli, Anushka Sharma and other celebs at Mumbai airport
Photos: Salman Khan's 'special friend' Iulia Vantur at a song launch
Photos: Hrithik Roshan, Anushka Sharma, other celebs dazzle at event
In Pictures: Sex scandals involving Indian politicians
Photos: Abhishek Bachchan and Farah Khan at Boman Irani's birthday bash