The rupee strengthened by 12 paise to Rs 44.25 against the US currency at the Interbank Foreign Exchange market in the morning trade on Wednesday, tracking dollar's losses against other major currencies.
Traders said besides dollar's losses against the euro and other Asian currencies, fresh capital inflows into equities by foreign funds kept the rupee sentiment firm.
The rupee had gained 10 paise to Rs 44.37/38 against the US currency in the previous session on dollar selling by banks and exporters as well as weak dollar overseas.
Meanwhile, the Bombay Stock Exchange index Sensex rose by 175.23 points, or 0.86 per cent, to 20,520.92 in the opening trade on Wednesday.
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