The Indian rupee strengthened by 26 paise to 74.48 against the US dollar in early trade on Monday, tracking a firm trend in the domestic equity market.
At the interbank foreign exchange, the domestic unit opened at 74.51 against the dollar, then inched higher to 74.48, registering a gain of 26 paise over its previous close.
On Friday, the rupee had settled at 74.74 against the US dollar.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.12 per cent up at 92.33.
On the domestic equity market front, BSE Sensex was trading 270.62 points or 0.52 per cent higher at 52,755.29, while the broader NSE Nifty advanced 84.75 points or 0.54 per cent to 15,806.95.
Forex traders said foreign fund outflows and firm crude oil prices could weigh on investor sentiment and cap the appreciation of the local unit.
Foreign institutional investors were net sellers in the capital market on Friday as they offloaded shares worth Rs 982.80 crore, as per exchange data.
Global oil benchmark Brent crude futures fell 0.05 per cent to $76.13 per barrel.