The rupee appreciated 14 paise to 73.62 against the US dollar in opening trade on Thursday as sustained foreign fund inflows and hectic buying in domestic equities strengthened investor sentiment.
Traders said the weakness of the American currency in the overseas market also supported the domestic unit.
At the interbank forex market, the domestic unit opened at 73.66 against the US dollar, then inched higher to 73.62 against the greenback, registering a rise of 14 paise over its previous close.
On Wednesday, the rupee had settled at 73.76 against the US dollar.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, fell 0.20 per cent to 90.22.
The US dollar is trading on a weak note as risk appetite rose on the expectation of an imminent Brexit trade deal between the UK and the European Union, Reliance Securities said in a research note.
Further, "Asian currencies were trading flat to stronger against the greenback this morning and could lend support to the domestic unit," the note added.
On the domestic equity market front, the 30-share BSE benchmark Sensex was trading 340.64 points higher at 46,784.82 and the broader NSE Nifty advanced 107.55 points to 13,708.65.
Foreign institutional investors were net buyers in the capital market as they purchased shares worth Rs 536.13 crore on a net basis on Wednesday, according to provisional exchange data.
Brent crude futures, the global oil benchmark, rose 0.68 per cent to $51.55 per barrel.