The rupee trimmed its early gains but was still quoted up by 3 paise at 56.14 against the dollar in late morning trade today due to selling of the US currency by banks amid its lower value overseas.
Good foreign capital inflows into equity market also affected the market sentiment.
The rupee resumed slightly higher at 56.15 per dollar as against the previous closing level of 56.17 at the Interbank Foreign Exchange (Forex) Market and firmed up further to 56.07.
However, it trimmed its early gains and was quoted at 56.14 per dollar at 1040 hours.
It hovered in a range of 56.07 and 56.17 per dollar during the morning deals.
In the global market, the US dollar extended losses against the Japanese yen in the early trade slipping below the 101-yen level in apparent profit-taking. The dollar was buying yen 100.98 compared with 101.10 in late North American trade Wednesday.
Meanwhile, the Indian benchmark BSE-30 share index, Sensex, dropped by 50.43 points, or 0.25 per cent, quoting 20,097.21 at 1100 hours.