The rupee on Tuesday recovered by 11 paise to 61.68 against the dollar in early trade at the Interbank Foreign Exchange market amid a higher opening in the stocks.
Sentiments turned buoyant after RBI yesterday cut the marginal standing facility (MSF) rate, at which it lends emergency funds to banks, by 0.5 per cent to 9 per cent with an aim to improve liquidity and boost economic activities.
The rupee had settled at 61.79 against the dollar yesterday, down by 35 paise over the previous close.
Traders said dollar selling by exporters and the RBI yesterday reducing the marginal standing facility (MSF) rate helped domestic currency to rise.
They said, however, weakness in other Asian currencies against the dollar overseas capped the rupee's gain.
Meanwhile, the BSE benchmark index regained 20,000 mark by soaring 239.62 points, or 1.20 per cent, to 20,134.72 in opening trade.