The rupee rose 28 paise to a nearly three-year high of Rs 43.90 per US dollar in the early trade today due to persistent selling of the American currency by banks and exporters in view of the sharp fall of the dollar in overseas markets.
The domestic unit resumed higher at Rs 44.09/10 per dollar against its overnight closing level of 44.18/19 per dollar and moved up further to 43.90 per dollar before quoting at 43.94/95 per dollar at 10.30 a.m.
The domestic currency moved in a range between Rs 43.90 and Rs 44.10 per dollar in the morning deals.
The rupee was last being traded lower than this level on August 29, 2008, when it was quoted at Rs 43.71 per dollar.
Banks and exporters preferred to reduce their dollar holdings due to weakness of the American currency in the overseas market, a forex dealer said.
In the New York market, the US dollar fell against a wide range of currencies yesterday, touching a record low against the Swiss franc and approaching a recent low versus the Japanese yen.
Selling in the US currency came after back-to-back speeches late Monday by the President, Mr Barack Obama, and the House Speaker, Mr John Boehner, revealed no progress on a deal crucial to raising the US debt ceiling and preventing a default.