The rupee appreciated 16 paise to 75.87 against the US dollar in early trade on Tuesday as sustained foreign fund inflows and rising domestic equity market boosted investor confidence.
Forex dealers said lower crude prices also helped the domestic unit to strengthen its ground.
The rupee opened strong at 75.86 against the US dollar. However, it soon edged marginally lower to quote 75.87 against the US dollar, a rise of 16 paise over its previous close.
It had settled at 76.03 against the greenback in the previous session on Monday.
Meanwhile, the equity benchmark Sensex was trading 145.74 points, or 0.42 per cent, up at 35,057.06. Similarly, NSE Nifty rose 46.15 points, or 0.45 per cent, to 10,357.35.
Foreign institutional investors remained net buyers in the capital market as they bought shares worth Rs 424.21 crore on Monday, according to provisional exchange data.
The dollar index, which gauges the greenback's strength against a basket of six currencies, was trading marginally higher by 0.03 per cent to 97.06.
Brent crude futures, the global oil benchmark, declined 0.19 per cent to USD 43.00 per barrel.
India's COVID-19 tally climbed to 4,40,215 on Tuesday while the death toll rose to 14,011 with 312 new fatalities, according to the Union Health Ministry data.
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