The rupee gained 19 paise against the US dollar Wednesday to trade at 69.95 after increased selling of the US currency by exporters and banks.
However, a lower opening of the domestic equity markets capped the rise, dealers said.
At the Interbank Foreign Exchange, the rupee opened on a strong note at 69.79 a dollar against the previous close of 70.14.
Further, the domestic unit surrendered early gains to quote at 69.95, showing a gain of 19 paise.
Financial markets were closed on Tuesday on account of Christmas. On Monday, the rupee had recovered 4 paise to close at 70.14 against the American currency, following weak crude oil prices and the dollar's losses in global markets due to political uncertainty in the US.
Meanwhile, the benchmark BSE Sensex plunged over 350 points as investors turned jittery over political uncertainty in the US and fears of a global economic slowdown amid heavy selloff by foreign investors.