The rupee strengthened by 16 paise to 68.05 against the dollar in early trade today at the Interbank Foreign Exchange on increased selling of the US currency by exporters and banks amid higher opening in the domestic equity market.
Forex dealers attributed the weakness of the dollar against other currencies to investors viewing the recent spurt of the greenback as unsubstantiated which supported the rupee.
A higher opening in the domestic equity market also influenced the rupee uptrend, they added.
On Monday, the rupee had settled almost flat with negative bias at 68.21 against the US currency in restricted trade. Meanwhile, the benchmark BSE Sensex rose 119.88 points, or 0.45 per cent, at 26,468.98 in early trade today.