The rupee advanced further by 24 paise to 54.19 against the US currency on selling of dollars by banks and exporters after the greenback weakened against against major world currencies.
Dealers said dollar slipped against the euro and yen after President Barack Obama was re-elected in a knife-edge US presidential election.
They added that dollar fell on expectations that under Obama the Federal Reserve would continue with the loose monetary policy.
The rupee resumed higher at 54.29 per dollar as against the last closing level of 54.43 per dollar at the Interbank Foreign Exchange (Forex) market.
It firmed up further to 54.11 per dollar before quoting at 54.19 per dollar at 1040 hours.
Expectations of persistent capital inflows from foreign funds into equity market also boosted the rupee value against the dollar, a dealer said.
The BSE benchmark Sensex recovered from initial losses and was quoted higher by 95 points in late morning trade.