The rupee gained 14 paise to 81.54 against the US dollar in early trade on Thursday supported by broad dollar weakness and a firm trend in domestic equities.
Forex traders said sustained foreign fund outflows weighed on investor sentiments and restricted the appreciation bias.
At the interbank foreign exchange, the domestic unit opened at 81.54 against the dollar, registering a rise of 14 paise over its previous close.
In initial trade, the local unit also touched an early low of 81.66 against US dollar.
On Wednesday, the rupee settled at 81.68 against the US dollar.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, fell 0.10 per cent to 103.08.
Brent crude futures rose 0.06 percent to USD 82.72 per barrel, the global oil benchmark.
In the domestic equity market, the 30-share BSE Sensex was trading 117.7 points or 0.20 per cent higher at 60,223.20. The broader NSE Nifty advanced 33.25 points or 0.19 per cent to 17,928.95.
Foreign Institutional Investors (FIIs) were net sellers in the capital market on Wednesday as they offloaded shares worth Rs 3,208.15 crore, according to exchange data.
With inputs from Agencies.
