The rupee appreciated by 5 paise to trade at Rs. 49.17 per dollar on the Interbank Foreign Exchange on Tuesday on increased foreign capital inflows.
Dealers said increased foreign capital inflows amid higher opening in local equities mainly kept the rupee sentiment firm.
The rupee had lost 29 paise to close at 49.22/23 against the dollar on fresh demand for the U.S. currency from importers on Monday.
Meanwhile, the BSE benchmark Sensex shot up by 174.27 points, or 1.00 per cent, to 17,620.02 in early trade.