The rupee strengthened by four paise to 65.25 against the dollar in early trade today on sustained selling of the US currency by exporters and banks amid firm equity markets.
Dealers said continued foreign fund inflows and selling of dollar by exporters supported the rupee.
The dollar, however, was firm against major Asian currencies which restricted the rupee movement, they added.
The rupee had risen by 22 paise to close at a seven-week high of 65.29 per dollar yesterday on persistent selling of the American currency by banks and exporters amid firm equities.
Meanwhile, the benchmark BSE Sensex reclaimed the 27,000-mark by surging 224.72 points or 0.83 per cent, at 27,010.27 in early trade.