The rupee strengthened by 12 paise to 77.93 against the US dollar in opening trade on Monday as lower crude oil prices supported the local unit.
However, steady outflows from foreign funds, a lackluster trend in domestic stocks, and a strong U.S. dollar overseas restricted the gain, forex traders said.
At the interbank exchange rate, the rupee opened strong at 77.98 against the U.S. dollar, then advanced gradually to trade at 77.93, registering a 12 paise rise in the last close.
In the previous session, the rupee advanced 5 paise to trade at 78.05 against the US dollar.
Meanwhile, the dollar index, which measures the strength of the greenback against a basket of six currencies, fell 0.30 percent to 104.38.
Brent crude futures, the global oil benchmark, fell 0.26 percent to USD 112.83 per barrel. The Indian rupee opened slightly
stronger against the U.S. currency after crude prices suffered the biggest fall in more than a month on concerns over demand outlook amid weak economic outlook, said Sriram Iyer, senior research analyst at Reliance Securities.
Meanwhile, most Asian and emerging market peers started slightly stronger on Monday morning and supported the local unit.
However, the dollar remained elevated, and persistent portfolio outflows could keep the rupee’s appreciation bias limited, Iyer noted.
On the domestic equity market front, the 30-share Sensex was trading 85.22 points or 0.17 percent lower at 51,275.20, while the broader NSE Nifty fell 39.35 points or 0.26 percent to 15,254.15.
Foreign institutional investors were net sellers in the capital market on Friday as they dumped shares worth Rs 7,818.61 crore, exchange data showed.