The rupee gained 3 paise to trade at Rs 49.26 per dollar on the Interbank Foreign Exchange on Friday on increased foreign capital inflows.
Dealers said increased foreign capital inflows amid firm local equities mainly kept rupee sentiment firm.
The rupee had ended 7 paise higher at Rs 49.29/30 against the US dollar on Wednesday amid sustained capital inflows.
The forex market was closed yesterday on account of municipal corporation elections.
Meanwhile, the BSE benchmark Sensex shot up by 192.20 points, or 1.06 per cent, to 18,346.19 in early trade on Friday.