In early trade on Monday, the rupee strengthened against the US dollar by 9 paise to 81.29, helped by widespread dollar weakness and a strong trend in domestic equities.
Forex traders claimed that ongoing withdrawals of foreign funds impacted investor sentiment and constrained the bias toward appreciation.
The domestic currency opened at 81.29 against the dollar on the interbank foreign exchange, up 9 paise from its previous close.
On Friday, it depreciated by 8 paise to close at 81.38 against the dollar.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, fell 0.32 per cent to 101.87.
Brent crude futures, the global oil benchmark, fell 0.53 per cent to USD 84.83 per barrel.
In the domestic equity market, the 30-share BSE Sensex was trading 143.87 points or 0.24 per cent higher at 60,405.05. The broader NSE Nifty advanced 22.75 points or 0.13 per cent to 17,979.35.
According to exchange data, Foreign Institutional Investors (FIIs) sold shares worth Rs 2,422.39 crore on Friday, making them net sellers in the capital market.
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