Rupee strengthened on Wednesday by 26 paise to 67.68-69 against a US dollar from its previous close of 67.95 in line with a weakness in the greenback against a host of Asian currencies.

In early trade on Wednesday, the dollar index, which tracks the movement of dollar against a basket of six major world currencies, fell 0.14 per cent at 96.11.

The rupee had closed on Tuesday amid wild swings caused by market concerns over the British vote to leave the European Union.

"An immediate sentiment of risk aversion following the global turmoil is likely to keep the rupee on the defensive amid heightened volatility; however, stronger macro fundamentals may cushion the impact in relation to peers," US Aagency Fitch group subsidiary India Ratings said in a note.

"In the course of week, investors will focus on market developments as the UK moves to formally exit the European Union and key officials both from US Fed, Bank of England and European Central Bank hold talks.

"The rupee is likely to trade in the range of 67.60-68.40/dollar this week," the rating agency said on the day that the Indian cabinet approved the 7th Pay panel recommendations for central government employees.