The rupee was trading strong by 42 paise at 66.18 against the dollar in the mid-session on increased selling of the US currency by exporters and banks amid higher foreign inflows following BJP’s resounding win in Uttar Pradesh and positive IIP numbers.

Forex dealers said that a weak dollar against other currencies overseas and buoyant domestic stock markets with the NSE Nifty hitting a new high of 9,122.75 points supported the rupee momentum.

Furthermore, industrial production expanding by 2.7 per cent in January too supported the rupee, they added.

The Index of Industrial Production (IIP) rose to 2.7 per cent in January this year, with all three tracked sectors of mining, electricity and manufacturing registering positive growth.

In contrast, the IIP had contracted by 1.6 per cent in January 2016. It stood at 0.1 per cent in December last year.

The domestic unit opened higher by 42 paise at 66.18 at the Interbank Foreign Exchange market today.

It hovered in a range of 66.24 and 66.13 before quoting at 66.18, up 42 paise at 2.50 pm local time.

On Friday, the rupee had gained 11 paise to close at a fresh 4-month high of 66.60 against the dollar on renewed selling of the US currency by exporters and banks.

Forex market remained closed yesterday on account of Holi.

Meanwhile, the benchmark BSE Sensex was trading higher by 455.07 points or 1.57 per cent at 29,401.30.