The rupee recovered 21 paise to 74.86 against the US dollar in opening trade on Tuesday, as positive domestic equities and a weak American currency in the overseas markets boosted investor sentiments.
At the interbank foreign exchange, the rupee opened on a strong note at 74.91, then surged higher to 74.86 against the American dollar, registering a rise of 21 paise in the early deals.
The rupee on Monday dived 18 paise to close at a five-week low of 75.07 against the US dollar on worries over the new coronavirus variant.
The appreciation bias in the rupee might be curtailed, as investor concern has resurfaced about how much damage the new Omicron coronavirus variant may unleash on the economy, traders said.
The dollar index, which gauges the greenback's strength against a basket of six currencies, slipped 0.21 per cent to 96.14.
On the domestic equity market front, the 30-share Sensex was trading 666.58 points or 1.16 per cent higher at 57,927.16, while the broader NSE Nifty jumped 199.65 points or 1.17 per cent to 17,253.60.
Global oil benchmark Brent crude futures advanced 0.63 per cent to $73.90 per barrel.
Foreign institutional investors were net sellers in the capital market on Monday, as they offloaded shares worth Rs 3,332.21 crore, according to exchange data.
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