The Indian rupee strengthened by 5 paise at 48.39 in opening trade today as strong rally in the stock markets raised hopes of more capital inflows by foreign funds.

Dollar's losses overseas also supported the Indian rupee.

At the Interbank Foreign Exchange (Forex) market, the domestic unit gained 5 paise to quote at 48.39 a dollar over the previous close of 48.4445/4550. Yesterday, rupee ended 7.50 paise higher after the BSE closed 2.61 per cent higher.

Forex dealers said hopes of increased capital inflows by foreign funds in line with better trends on the other Asian equity markets and dollar's weakness against other currencies mainly supported the Indian rupee.