The Indian rupee trimmed initial gains but was still trading up by 17 paise to 66.38 against the US currency on bouts of dollar selling by some banks and exporters.
The domestic unit resumed sharply higher at 66.38 per dollar as against yesterday's level of 66.55 at the Interbank Foreign Exchange (Forex) market.
It hovered in a range of 66.26 to 66.42 during the morning deals before quoting 66.38 at 1030 hrs.
The rupee had strengthened against the US dollar after touching an intra-day high of 66.80 yesterday due to selling by custodial banks and some buying from PSBs to meet the oil demand." a forex dealer said.
"The rupee will take cues from the equity market and is expected to trade in a range of 66.42-66.72 per dollar," he added.
The dollar index is currently up 0.25 per cent at 96.11 against a basket of six currencies.
Oil prices edged higher in quiet Asian early trade as dealers set aside weak Chinese trade data and looked ahead to the release of a US stockpiles report, analysts said.
Meanwhile, the benchmark BSE Sensex was trading higher by 346 points or 1.37 per cent to 25,664.19 at 1030 hrs.